My point is:

DON'T go with the idea that EVERYTHING is available through interlibrary loan on EVERY library. You may be able to find something on YOUR local public library. But John Doe on HIS public library 1,000 miles away STILL would not be able to get a copy.

As to your point that "line item for postage or miscellaneous expenses" WE librarians are the ones that prepare and recommend the budget. If we find that postage and other rates are going up, and the town votes to deny a tax levy increase, WE the librarians reduce the amount for line items. Sometimes we do that by CLOSING the library more hours. Sometimes we REDUCE interlibrary loan services. Or buy less books, videos, and CDs. Or reduce the number of subscriptions available. Sometimes we decide to keep those other services high but we FIRE clerks, and sometimes by FIRING librarians.

I have participated in those budget decisions, and had to reduce my services for budget reasons.

As to your line "Besides, it is probably cheaper to borrow rare items and pay the postage than it is to purchase and store them." If the item is really rare, it will NOT be sent through Interlibrary Loan, and this is REALLY a decision made by the lending library (the one that owns the item and is the one being asked to lend it). Why? Because 1) it can get damaged by the US Postal Service; 2) it may get lost and as you point out be costly to replace. At best in this case the lending library may photocopy a limited amount of pages, yet this also may cause damages to the item being copied.

Read again Peter's answer to you: "My local librarian tried to look it up on their system but couldn't find it. I'm not exactly sure if she knew what she was doing..."

This is a negative comment by him. As if the librarian didn't know what (s)he was doing. Of course (s)he knew! It was that THERE WAS NO copy available in that library system.