I've actually seen books with ads before, it is not a new concept. Those were rather old books, too (pre-internet). Only very few ads, though, maybe three pages in the whole book.
Filling covers of the books with ads is very common (I can find them in many books printed in the last 100 years, mostly textbooks, technical manuals and paperbacks, of course), but I haven't seen ads anywhere else, yet.
Lots of paperbacks have ads in the last few pages (other books by the same publisher, order forms, sample chapters for the next book in the series, what have you). The difference is that these ads are after the main portion of the text, not marbled into the text itself.
Anyway, reading a book requires a completely different mindset from reading a magazine/ watching TV/ browsing the web. So I guess that's why ads "work" in one medium and not the other.
I like your idea with the out of print books!