Two things:
Firstly, the library hasn't backed down (yet) - they've just sent it back to their Trustees (who are probably the group that would face any legal difficulties). Seems perfectly reasonable - if I were just some random employee then that's totally what I would do too.
Secondly, is there the option of hosting the node but only allowing the exit to see the library hosted content? That should resolve the issue, right? TOR users wherever they are can get to the library content but nowhere else (via the Library node). So no "criminal" traffic can be passing through the libraries systems onto the internet. Or do you think they are arguing that even passing the encrypted TOR in/out stream, which I guess might contain a few instances of naughtiness, is a problem?
Biting the hand that feeds IT
