Axua:agree with you regarding safety and ownership of manual and yes it is quite a common practice here. I know that PADI is seriously thinking of the PIC and manual combo (For replacement cards, they could just design a separate envelope just for that purpose and that one can be sold separately), because I believe this year they had 20,000 certifications but sold only 2,000 manuals.
The issue of loaning books by the instructor has also been addressed in the news letter and PADIs stance seems to be clear that such a practice no longer will be tolerated.
PS: I think PIC cards along with the manuals will never fly. I'm sure PADI likes the electronic submission over the internet (less paper work)