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I think they actually just purchase Kindle versions of the books and use that "up to 6 simultaneous devices, per publisher limits" thing that most of the DRM Amazon books allow. So that 9.99 bestseller can go on up to 6 Kindles at a time under optimum conditions, which amortizes the cost fairly nicely. Of course, it'll be loaded up with maybe a dozen other 9.99 titles at least, but I think it mostly works out, considering.
As for lending, it's more about portable readability than any particular format, I would say. The format matters less than the overall reading experience and ePub support is a moot point because the library is not loading these things up from our province-wide e-books library collection.*
Anyway, these things have adjustable font-size and built-in text-to-speech, which seem like they would be great for people with vision difficulties who'd like to read the latest bestsellers without having to wait for the special Large Print edition to be made and bought (if it ever does get so).
Considering that every suburban branch I've ever been in has had a fairly large-ish Large Print section mostly filled with older stuff (lots of Danielle Steel, the occasional classic, Ye Olde Formerly Hot Now Forgotten Bestseller of Yesteryear), I can see how even having a few Kindles/Kobos/Sonys actually works out to being a cheap and cost-effective augmentation of that section without the library having to risk unloved books sticking around as shelf clutter after their popularity period.
* Or at least I certainly hope not because they're just one metropolitan suburban branch and there 4.5 million people throughout the entire province potentially waiting to get their hands on the 5-9 copies the system gets of most of the "bestseller" e-books for regular patron loans (usually 20+ people on hold in the first few months), and they should really be using their own individual resources for their individual e-reader lending programs.
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