alt Hacker News> suit is mainly over whether controlled digital lending is legal at all
No, it was not, even supported by the quotes you pulled. Libraries right now, with publisher blessing, offer all manner of controlled digital lending. The suit was because IA did it buy undercutting the publishers copy rights to that legal market. Had IA simply done what every other library has done to provide controlled digital lending, there would be no suit.
"Controlled digital lending" is not a generic term for "lending digital items". It specifically refers to the practice of a library digitizing physical materials in its collection, then lending them digitally based on a 1:1 owned-to-loaned ratio. The idea is that the library should be able to treat digitized versions of a book the same way it treats the physical book, and the total number of physical and digital copies of the book that are lent out at once should never be more than the number of physical copies that the library has.
In contrast to this, the e-book lending practiced by most libraries with publisher blessing involves the library purchasing special library-specific e-book licenses from the publisher. These licenses contain various contractual restrictions, such as the library having to re-purchase the e-book after a certain amount of time or after a certain number of borrows.