With ebooks, DRM poses little challenge to pirates, who can crack these locks with a few clicks. Meanwhile, for the paying customer, DRM makes it difficult to move ebooks between devices and traps readers into a single retail channel.
Yep, that's one of the conditions that supposedly will encourage various forms of e-piracy rather than purchase. Basically, making something harder to acquire or use will often make people more likely to find an easier route to it.
Not only that, higher cost is also supposed to contribute to theft. The only people overcharging for e-books these days really do seem to be the Big 5. In fact, on every sale of a book, a Big 5 editor expects to pull in twice what the author will, and it's their own paycheck they see protected by controlling sale price. Many authors are seriously unamused.
About DRM-free lending: Forbes had an interesting idea that required lending of e-books become a physical act. You'd just perform a "bump" or "swipe" with two readers (or an accessory to a reader) that would tie the loaned e-book to the other reader. Then, you'd need to retrieve it. The article goes over some of the flaws of the suggestion, but for a library it might not be a terrible option. You'd just need to visit the main desk or have a bump device at your home desk for checkout.
Also, here's a blog on library lending using DRM-free books, and how it might be achieved.