Google just anounced plans to scan in a couple of libraries, among others the Harvard University Library with 15 million books. Google is not saying anything about how this is done, but it is obviously quite a big task (especially since the books are not to be damaged during the scanning and indexing). The how is a technical issue, the why is much more important. This is the don't be evil, they are always talking about.
Google's misison statement is to organize the world's information and make it universally accessible and useful. The Internet aside, these are not the best times for that. Copyright, trademarks and patens have all become tools for information 'owners' to exclude others. You want to acces my info, you have to pay. More and more economic activity has to do with creating information and it is of course only logical that people involved in this want some financial rewards for their efforts.
But it is also not very productive. The nice thing about information is that you can freely copy it, without much cost or quality loss. Throw in the Internet and you can access it from everywhere. That's the sad thing. Just when we can finally offer universal access to all information ever created, we're closing the posibilities by passing more copyright laws.
And that's why this is so great. 15 million books accesible from everywhere by anybody who has Internet access (and that's not everybody, I know, but we're working on that). Sure, there are copyright issues (copyrighted works will only be accesible to extend that the copyright owner allows) and it will take a lot of work and money, but after this is done, it is for sure better to search on Google than to search in a library. And at least for the books in public domain, complete access is granted. The rest might follow.
When I was a kid I used to sneak into bookstores and read the books there. After a while I would be caught and the bookstore keeper would send me away, saying, we're not a library. Screwing your best customer, this is called in the trade. I grew up to become quite a book buyer, but I still remember which bookshops were this nasty.
Nowadays bookshops seem to better understand that readers are actually their customers and they make bookshops nice places to be. It helps with the sales. Maybe at some point they'll discover that people that surf for books are also potential customers and letting people know what you have will increase their willingness to buy what you have.