That was what the Internet Archive was doing.
They got sued and the last I heard, had lost at every level. That said, I don't know that the lawsuits are over yet.
To be clear, no one claims that IA digitally lent out more copies than it physically had. The publishers argued that IA couldn't make a digital copy and lend that instead of the physical copy.
> [2024-04-19] Today, the Internet Archive has taken a decisive final step in our ongoing battle for libraries’ digital rights by submitting the final appellate reply brief [PDF] in Hachette v. Internet Archive, the publishers’ lawsuit against our library.
https://blog.archive.org/2024/04/19/internet-archive-stands-...
“Furthermore, they argued that the Internet Archive was not abiding by CDL, as it had acknowledged that its partner libraries were not always withdrawing their physical copies from their shelves.”
Are you sure no one argued they weren’t lending more books than they had? Specifically during the pandemic it is true that just kind of decided that it was probably the case that there were plenty of library books not being distributed (note books they didn’t own) so it was ok to loan basically as many copies as they wanted