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I found it.
I dont know how I missed this paragraph the first time I read the terms and conditions for Overdrive's Libby app. I suspect the preceding legal sections numbed my brain, and when I skipped over those sections today I retained enough cognition to find:
"For Content downloaded or accessed from a library service, at the end of the lending period, your license to the Content terminates, and you may no longer use or access the Content. At the end of the lending period, you shall delete and/or destroy any and all copies of the Content. In the event OverDrive, the library or other rights holders determines you are violating permitted uses of the Content, we reserve the right to suspend or terminate your ability to use or access a Service or the Content"
So there it is. If you make a copy of non DRM protected books like stated in my OP, you are violating Libby (overdrive) terms and conditions if you dont delete/destroy your copy after your loan ends.
I find terms and conditions painful to read, but it IS in there.
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