According to a posting in the Internet Archive forum, the state of California has officially designated the Internet Archive to be a library. They link to a Pittsburgh Post-Gazette article for more information.
Perhaps Mary can comment on the process necessary to be designated a library in California. The action is interesting, regardless. One of the topics covered in the March 2006 roundtables of the Section 108 Study Group was whether purely virtual libraries should be able to take advantage of the Section 108 exemptions. (Under current law they most likely would not be eligibile.) California's action seems to be a recognition that how we define a library is changing.