It's not theft, it's copyright violation, and no, I don't think it's a societal harm. Nobody is being deprived of anything, because digital goods are non-rivalrous.
The author of this project is riffing on an older creative work to make a new creative work, exactly as artists did for all the millenia of human civilization, until lawyers got involved in the 20th century and fucked it all up.
You're right; theft is a legal term, and it's not technically theft, it's a copyright violation as you say. They rest is your opinion. If I intended on buying the book and instead downloaded it for free I am absolutely depriving the copyright holder of income. I'm far from a hard-liner on this but, in this instance, I believe it's wrong to download these books and read them. If you want the book go ahead and pay for it.
As far as the project goes, the author should not be bundling the books with everything else (common sense and debatable moral issues.) I have no issue with him using the texts, it's the distribution that's a problem.
The author of this project is riffing on an older creative work to make a new creative work, exactly as artists did for all the millenia of human civilization, until lawyers got involved in the 20th century and fucked it all up.