Exactly ... when I see someone with a godsword or santa, or maybe even a party hat, I don't start thinking that person was dedicated to working for it. I first wonder if they've borrowed the item, and sometimes it's obvious if they have. The feeling of accomplishment that comes with expensive items is a little less now that there could be some noob running around saying they worked as hard as you did when they simply borrowed the thing, but it doesn't bother me too much since I know I actually bought mine
Having a borrow option in the GE would ruin incentives, like everyone said. If you need a godsword or piece of armor (possily an entire set if they go that far), just go there and borrow it. There goes some of the need to earn gp.
Lending through friends is nice when you just want to experiment or do so for the heck of it, but random people.. not so much. Also don't see how borrowing through GE would work unless someone didn't really want their item, renting would at least give the lender some cash.