What happened to that in the end? I heard they wanted to digitize the worlds books and then it just petered out at some point and heard nothing about it. Did they continue or was it spun to Internet Archive to do?
My understanding is the project led into Google Books. Google fought many legal cases and ultimately won but their enthusiasm to scan more books seems to have waned. Google basically convinced judges that by only letting people see a few pages, it fell under fair use, but then that meant you didn't get a giant library because you couldn't read the whole book.
This is probably the method that gives you the best quality (deskewing, lighting) without cutting the back of the book and feeding it into a scanner. (AFAIK)
I saw a book scanner similar to this one that used a vacuum to turn pages but otherwise same principle.