For starters, I agree with all of what Bitt and Doug have said.

Now, to provide my own opinion, I don't believe it's unethical as long as you're following the spirit of the process. Which is that the audio book is being borrowed. This means that after listening to it, it should be deleted, rather than archived as part of a permanent personal collection. In that case it has been time shifted, consumed and expired. This satisfies your schedule and as far as the library is concerned, their technical policies (because the book is available for anyone else when the initial two weeks is up). If you intend to keep a copy, it should be purchased.

That said, one person's ethics isn't another person's. Someone else will argue that your loan agreement is for 14 days, period. If you can't consume the content in those 14 days then you should try to borrow it again subject to the library's rules.

While a comparison to TV and time-shifting with a TiVo is apt for me, the same I can also see enough differences in the two. The principle one being that you're signing out the library content subject to some borrowing agreements that would be in place either when you obtained your library card or at the time of borrowing (more than likely both). No such agreement exists for broadcast TV.

In terms of legality, it's definitely illegal on at least one count. Circumventing the DRM is a violation of the US Digital Millennium Copyright Act (DMCA).

The other argument for (potential) illegality, from a licensing standpoint, is that the library is in violation of their licensing terms which likely stipulate that they have rights to "n" concurrent copies of the work at any given time. When you time shift on your own, this has no effect on the library's system, which means they can re-issue the loan, effectively putting up to "n+1" copies in circulation.