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I rarely re-read a book -- unless I really like it. So far, I borrow only paper books from the library. I discovered Chris Grabenstein's Ceepak series that way, and bought the first three as ebooks because they were very reasonably priced. When/if the later volumes experience significant price drops I may buy them.
I think obscure authors will have more to gain (from potential library sales) than they will lose (from lost sales to readers who probably don't know who they are anyway).
From what I've seen, Smashwords authors have the option to opt out of this, like any other outlet.
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