This only works well if the library always has an excess number of copies of books which probably isn't too hard to accomplish. I remember far too many school projects where many books would already be checked out. Imposing a fee for keeping he book too long allowed more people to have the book in a given amount of time.

I guess some school projects (middle & high school level) may still require citing a book or two but it probably isn't a very big issue. Adults that really want $X book will just buy it used on Amazon.