The section I quoted from the article (which is a direct quotes from the ruling) makes it sound like it's illegal regardless of the number of simultaneous copies being distributed, while your link explicitly states that 1:1 is legal.
My understanding is that the original Internet Archive library worked under the 1:1 lending theory. Then, during COVID, they decided to open up what they called the "National Emergency Library", offering unlimited copies of the books, which is why the lawsuit happened.
Roughly correct, but: the main issue turned out to be whether even the 1:1 lending was legal. That's what the initial ruling clearly denied IA, and contesting that is the focus of the IA's appeal. (The appeal also asks, in a small aside section 'II', that if the general idea of 1:1 controlled digital lending judged acceptable, that the ruling with regard to the temporary "National Emergency Library" expansion also be reevaluated in that light.)
Some of the language in the Cornell page implies to me it's specific to "preservation" copies, not necessarily other format-shifts for lending.
But the interactions of tradition, legal precedents, and different laws in different places are complicated, and subject to interpretation & various shifting balances-of-considerations!
That's why it's silly when armchair opinionators casually judge, "IA clearly did something wrong". There's a lot of room in the law for fair-use copying, even against the rightsholders' strongest wishes, and especially for librarylike activities.
So I'm a bit confused.