LIbraries outside of the US do not offer Kindle formats, including Australian libraries. Australian libraries offer epubs (and some pdf's), usually with Adobe DRM. This DRM must, as an earlier post indicated, be removed following which the newly liberated epub can be converted to mobi or azw3 for sideloading and reading on a Kindle. I can't comment on the legality or otherwise, though morally I don't think there is any harm done if you make only a single copy, read it within the time of the loan and delete it immediately thereafter
As far as I'm aware there is no relevant difference between library epubs and purchased epubs. I have no problems converting the latter and reading them on my Kindle, though I'm not overly fussy. Page numbers are usually pretty well meaningless with ebooks in any event.
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