This is the perfect place to put a pull out bed. I always look at those beds and think they're impractical because it's too hard to leave all of the open floor space needed for one but I'd happily do it for this library/reading space
Turn your books into works of art using the Invisible Book Shelf - This is so awesome, I have so many books and I love them all, but storing them on a bookshelf doesn't show how great they are individually.
Levitate Architects used a staircase to a loft-like bedroom to create an enormous amount of book storage space. Even though the staircase isn't very compact but could accomodate so many books that it would save some space anyway.