So, I stumbled across a few tools & resources for converting file formats for ebooks, especially for Kindle, since it does not natively support either .lit or .epub formats:
- MobileRead's Excellent Ebook reader page (lots of conversion tools)
- How to convert file formats for Ebook readers (MobileRead)
- Converting EPub to Kindle Compatible mobi format
- Kindle Publishing Tools (from Amazon)
I haven't tried borrowing a Kindle book from my library yet but but Lendle, a personal lending site, seems still be active, in spite of earlier problems with Amazon.