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FWIW, in my younger, poorer days I used to hit the library booksales and purchase books that had significant wear 'n' tear or other issues and been removed from library shelves. Been stampled "no longer the property of X library" or had a marker stripe through the library stamp. These books are still re-readable, you have to be a little gentle but they're not totally useless and I paid money (granted usually less than $1) for them.\
26 loans, by the way, wouldn't be a year's lease for the most popular books. Many people return early out of courtesy if they know their book is in demand.
I could see a lease/subscription working if there was some quid pro quo for the library and a reasonable term/price, but I think if the price is the same and the expiration time potentially unreasonably short, what libraries will choose to do is buy e-books from other publishers than HC until this shakes out.
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