Regular books wear out just like library books...
If you ignore the entire "information wants to be free" thing, this makes sense and is reasonable. After all why shouldn't they preserve their existing business model? The problem with this thinking is that it can be applied not just to libraries but to individuals too. Why shouldn't an ebook you buy not wear out just like library books? What about your iTunes collection? CDs scratch, crack or flake, records warp and become scratched, magnetic tapes stretches and snap. Nothing lasts forever. So why not protect those business model too? What's good for the goose should be good for the gander, right?
Of course it was tried, most notably with music via DRM. Nobody liked it, the early business built upon it (it being Real and WM DRM) have since folded. Everyone tried to control copying (Sony Rootkit fiasco), some tried to create self destructing content with mixed success (24 hour self destructing DVDs ). It's only been with libraries that DRM has been able to get a good foothold (though not complete as some content is mp3, which is likely to end since OverDrive now does transcoding of WM content for iTunes devices).
If Harper Collins pulls this stunt off, all the other content trolls will do the same. The fun thing here is that library licenses cost more than a regular single user licenses. So if this comes to pass, they will pay more and get less. Ultimately it's our money that's funding their greed, be your library sustained by donations, membership fees or taxes.
And once again I find my mind drawn to "The Right to Read" by Richard Stallman and each time it seems that we are that little bit closer to that world. The first time I read it it in the 90's it was science fiction, now it just scares me.