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Your existing collection of downloadable eBooks will be available to Kindle customers. As you add new eBooks to your collection, those titles will also be available in Kindle format for lending to Kindle and Kindle reading apps. Your library will not need to purchase any additional units to have Kindle compatibility. This will work for your existing copies and units.
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This can only mean one of two things:
1 - All Kindles and Kindle apps will be updated to read Epub files. This will still be separated out as "for Kindle", possibly for some minor technical differences, but mostly for Marketing reasons - to keep Average Joe blissfully ignorant of the concept of an open format.
OR
2 - The "checking out of a book that is available" will become 100% Accounting. Neither Publishers nor Libraries actually care about the text of the books, they only care about Authors and Titles (and sales). Much like Microsoft Windows, a library buying 3 copies of a Stephen King will actually be buying 3 licenses. Then Overdrive (or even Amazon themselves) can store and serve the actual physical books in whatever format is required by the Patron. Given how small ebooks are, relative to current hard drives and broadband speeds, the actual ebooks for all the Libraries could be stored on a web server in a Janitor's hall closet in Moscow...