I have never seen a family in a library, and of the hundreds (possibly thousands) of times I have visited a library, I was never there with family members.
I take my family to the library all the time. It is important to show them that libraries are places where knowledge and information, as well as culture can be found. Also, our local library is cool.. They have a cafe attached, and a selection of kids games/activities available in the library. You really can make an afternoon of it.
Now, if someone was openly watching porn in our library I would simply keep my kids out of view of the screen - simply because I don't want to expose them to it at such a young age.
I applaud the library's decision to not ask that the man stop viewing pornography, and I applaud their decision to not censor anything. Censorship is such a slippery slope. If we start censoring to protect the sensibilities of one minority why shouldn't we protect every minority?
The guy really was a complete jerk though (pun intended). If you are going to watch pornography then pick an area where it won't be openly visible to everyone using the facilities. Not because porn is bad, but because some people are easily offended and you should do them the basic courtesy of trying not to offend them. I'm sure you would ask that others would afford you the same courtesy whenever possible.