I think the 14 day loan is quite short - maybe you should be allowed to specify the amount of time you can loan the book (say choose between 14, 21 or 28).
Agree it sucks you can lend a book only once though. Would like that clarified (asked in Amazon discussion group)
It makes sense you can't read a Kindle book you've loaned out - I can't do that with a real book - why should I be able to do it with an ebook.
It would be great if libraries could lend Kindle books (they would need to buy/lease multiple copies) and I bet they would like the ability to automatically get the book back after x days - maybe one day....