What a wonderful idea! I love it!
I saw a show awhile back that talked about a community that did something similar. In that town, each family that wanted to participate built and decorated a simple structure, something akin to a birdhouse, and put it on their porch. They then selected whatever books they wanted to "lend", put a name plate in the book and left it in structure on porch. Families walking by could "borrow" the books, read them, and then return them when they were done. The borrowers also sign out the books by writing their names, phone numbers and titles of books on a piece of paper that is in each box.
You can put out whatever kinds of books you want, children's, adult, sci-fi, cookbooks, mystery, etc. That's the beauty of something like this, what you don't have, someone else might!
I live in a suburb of Seattle and we have several of these "lending libraries" in many of our neighborhoods and they work really well. There are even systems like this in place in some of our small towns were there are no libraries at all. It does have to work on the honor system, but I haven't really heard of any problems.
This system might be a little challenging to set up, but so worth it!
Good luck with whatever you decided.