Donna Wentworth at Copyfight excerpts and links to discussion on libraries, copyright and GooglePrint.
Could Google be considered a library? I don't think so, but you can read further discussion there and decide for yourself. If Google is a library, [which it isn't*], it would not be liable for infringement if it made a good faith fair use assessment of GoogleLibrary.
Okay, I'm the only one I know calling it GoogleLibrary - but that's to distinguish it from the larger GooglePrint program, which is largely a publisher-authorized program indexing in-print titles.
*Added later - that is, legally, Google isn't a library with respect to copyright law. See discussion at Copyfight link above for more detail.