I have a friend who is attending graduate school and mentioned that the graduate students in his program each had collected a sizable number of different academic documents (term papers, book and article lists, obscure or important pdf journal articles) and wanted to share them together in what the librarian in me would describe as a digital "group library". He asked me if I knew of any possible solutions. I recommended Drupal.
In about an hour of research + configuration, we pulled together a few cool drupal modules and got a digital library up and running. The digital library stores its records in custom CCK fields, were presented to users using some slickly configured Views, and used tags all over the place with a cool tag cloud from Tagadelic. With a bit of tinkering, I was able to use some Word2TXT and PDF2TXT extraction tools to generate searchable text for the document and save it to the node type using a nodeapi hook on submit/update. I also turned on the ability to leave comments and discuss documents and the RSS feed to let people know when new documents are uploaded.
The whole experience left me feeling really positive about the potential to develop some really cool digital library functionality using Drupal and maybe even move towards a "Drupal Digital Library" install profile. There are a few cool open source digital library projects (including my favorite, Greenstone), but I think Drupal has a lot to offer not only in the storing + sharing of documents. Plus, there is some great potential to develop a community of people sharing + commenting on those documents.