I also read the librarian as female, which I'm kind of sad about.

Lace is female - why are you sad about reading her that way?

I loved the story, found it very touching, and would like to know more about the world it's in.

Yaaaay! I'll answer any setting questions you care to pose :)

So has someone discovered immortality, but some ruling council is keeping it hidden? Or is it just that they're blocking research into it, but not hiding any actual information? Are they hiding the very idea of it? And what's the librarian really up to?

Nobody has discovered it yet. The communities in which Key's ilk live suppress the notion of even looking for it; in the rest of the world they're working on it in a few places but aren't making much progress. The librarian isn't up to a whole lot; if she were very dedicated to finding out how to be immortal she'd have ditched the community years ago - she just has a few ideas that aren't like what the community leaders would like her to have and took enough of a shine to Key that she wanted to share them with em. I have read both "Fable of the Dragon" and "The Giver" - the former I loved, the latter I loved until I re-read it with a more mature understanding of worldbuilding, but I didn't think of either consciously when writing.

You are most welcome for the sharing of the story. Have a look at my other stuff, if you are so inclined :)