"We lent books that we own—at the Internet Archive and also the other endorsing libraries. These books were purchased and we knew they were not circulating physically."

I read this as not increasing the book pool, but saying, "We own Book A. Our endorsing libraries have a total of 9 copies of Book A." However, instead of now offering 10 copies of Book A (which would have adhered to 1:1), they offered unlimited loans, which certainly breaks 1:1.