Libraries are exploring both Overdrive downloadable collections and loanable Kindles with preloaded titles. Both have advantages and disadvantages and neither is ideal.
NCSU Libraries is an academic library that has been using Kindles to provide a user-developed collection of popular titles for 2 years. Users get to pick the titles they want rather than what the library has purchased. You can see how this works in the one minute video
How to Check Out a Kindle at the NCSU Libraries.