Welcome to MobileRead, dynabook!
You can certainly do what you mention, if you like. The caveats are that a Reader can only be authorized to a single account at a time, and you can't read DRMed books unless the Reader is authorized to the account that purchased them.
So the practical upshot is that while he's reading your "lent" book, he won't be able to read any of his own, and once he de-auth's from your account, he won't be able to read your "lent" book anymore.
Just be aware of those, and willing to work around them, and you should be fine.
