renaming pdf's within the library/comforming to the library settings

First, there is no good UI driven method to change a books title from within ADE. This is well known feature request at this point, and while this will not be in the upcoming 1.5 release, it is being considered for future releases.

Technical details of how DE gets the title in the first place follows (read at your own risk):
Digital Editions gets the title from the PDF Metadata. In raw PDF terms, the title comes first from the encryption dictionary or voucher EBX_TITLE element, second (if EBX_TITLE doesn't exist - ie it's not a purchase eBook) from the information dictionary - Title, and then lastly from the file name (if neither of the previous exists. Finally DE stores this information in the manifest.xml and retrieves it from the manifest thereafter.

Until we fix the problem on our end, to fix the title on your own you have a number of Adobe supported ways:

1.) If it is not a protected book, you can edit the title in the Acrobat (Bring up Document Properties and change the Title in the Description tab), and then re-add the document to Digital Editions

2.) If it is a protected book, complain to the publisher.

I'd be interested in hearing the answer to this one because I'm suffering the same problem. When the pdf files are added to the library, their titles do not appear. Instead other metadata is displayed, such as frontpage, often with an .indd extension

NOt sure what you mean by "DE suggests renaming the file"? Can you please submit a support incident at www.adobe.com/support/digitaleditions/? Thanks.