If I understand correctly in the UK libraries pay a fee to a clearing house that is then distributed to authors.

Yes, but it's not much. When I was getting five figure royalties for book sales, the most I ever had from PLR was £800, and that was a one off. A few years of £200 was more usual.

There's a fixed PLR pot and the most popular authors walk off with most of it.

Not that I'm going to complain about getting money for nothing, but it's an approach that needs fine tuning to support less successful authors - and indeed libraries in general, which are chronically underfunded in the UK.