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While Kobo added overdrive support, they did not add it to the H2O, nor (I believe) to the Kobo iOS app (since this would be a rather convoluted given overdrive has two apps for iOS already). Though if you have a Kobo with overdrive support then syncing the H2O (on the same Kobo account) would download the books.
As to multiple library cards, yes... in a way. On the Kobo itself she'd only be able to search from one of the given libraries. However you can link all the library cards to overdrive and sign in to the overdrive account on Kobo, then use the iOS app Libby to search and borrow from all three libraries fairly easily, she'd still need to switch libraries but with Libby it's a mere tap to that library on a Kobo it's more involved. Any book borrowed from any of the three linked to overdrive would then come to her Kobo on a sync.
Note that she would obviously need a Kobo which supports Overdrive, or at least a Kobo which does would need to be logged in with the same accounts.
Of note is that Kobo has recently officially supported dropbox on the Forma, there's a user made mod that pre-dates this which brought dropbox and other cloud storage services over as well. Though you would need to either transfer .epub or if using kepub name the file .kepub.epub for the Kobo to read it (regardless of if it's via the official supported method or the user mod).
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