Just tried removing a book from library, and it said "you can find this item again in the Kobo Store and click Add to Library." Then I did it and the book went back.
But I guess that you can't add your books back to library once they were removed from the store... (Rakuten Kobo did this to some of my books because they made the "updated" versions, re-categorized them, or whatever reason)
For the record: if you use a Japanese Rakuten account to access Kobo, there's
another library page you can use, which has a "同期ON/OFF" (sync on/off) function instead of "delete" (but does the same thing).
Update: I can still access the old
trash page.