Amazon announced this morning that they are working with OverDrive to make eBooks available for Kindle users later this year. The story is being carried by several national news sources:
NYT, Media Decoder blog; Coming to Your Kindle: Library Books
Wall Street Journal; Amazon to Add Library Lending to Kindle
The Associated Press; Amazon says library e-books coming to the Kindle
Specific question about the program are being addressed on the OverDrive blog.