The only way to read ePub library books on a Kindle is to remove the DRM. But then you have to make sure you remember to delete all your copies of the book manually when the loan period expires.
If your library has Mobipocket format ebooks, I think that using kindlepid.py and kindlefix.py should still work.
I'm pretty sure they're in the large archive of tools at Alf's blog. Google is your friend.
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