Amazon isn't short sighted; they know exactly what they are doing and doing well for themselves. 50% world market share (minimum) says what they're doing is working.
Two things to keep in mind:
1- Kindle came out before ePub.
2- Amazon is in the book *selling* business. And the reason Amazon has the lowest-priced premium reader is because of their walled-garden business model. If you want one, you get the other; that's the deal.
Now, if you *must* have epub library access and you want access to the Kindle store, you have three roads to take:
1- Get a Tablet PC and install Kindle for PC and Adobe Digital Editions. Viliv (among others) makes some sweet Tablet PCs with 5in and larger screens.
2- Get a smartphone, Android Tablet, or an iPod touch. Add the Kindle app and the upcoming Overdrive reader app. You'd be covered.
http://www.overdrive.com/aboutus/get...cleID=20100519
If you don't mind reading on an LCD screen and don't require extreme battery life there have been quite a few Android 2.x tablets announced this week that might meet your needs; Archos alone announced 5 models in different sizes. Just make sure its Android 2 or higher; there are a lot of cheap Android 1.x tablets that offer substandard performance.
3- Get an Adept-based eink Reader that also supports Mobipocket format and learn to remove DRM from Kindle for PC books. It's not hard. How legal it is depends on where you live.
Theoretically, if your library offered up Mobi-drm'ed ebooks you could get those to work with Kindle but it's not a sure thing.
It's early in the ebook business and many of the players are still trying to figure out a business model that works for them. Amazon, however, figured out a model that works for them so while the others experiment and explore, Amazon has been growing their business and raking in the dough.
What comes next is anybody's guess but for now, what we have is what is.
We pick our poison and hope for the best.
Good luck!