It's going to cost way more to replace the e-readers than it does to fix/replace books. For one thing, repairing an e-reader is almost impossible and, even when it can be done, costs about half as much, or more, as buying a new one. Books, however, can be rebound and repaired to a decent extent before they need replacement. E-readers are also way more fragile than books. Show me even one e-reader that can be dropped from 5 feet, pushed off a desk, thrown into a backpack, dropped again, have a stack of junk (pencils, other books, water bottles, etc.) dropped onto it without breaking and I'll eat my hat. And don't forget the chargers for these things. The cords will break and the chargers will go missing like crazy.
The only reason this idea might work is because Texas now sees it fit to classify failure to return a library book or e-reader as a crime! I'm sure that throwing people in jail for failing to return library books will be a great help to society.