For what it's worth in 2025, in my research it seems possible to use within Libraries, though it still could be subjective. Some form of official guidance from Google would be more helpful still as their dream of removing the older UI compat libs to reduce overall app size would depend on library devs also avoiding using those older libs.

The biggest downside I know of is the level of risk of breaking Compose version conflicts with the app using your library, and that's a risk with any dependency in a library project. Compose is a lot larger than most libraries though as it's many sub-dependencies. If Compose remains stable enough, it could work out fine.

I am curious to find more examples in the wild as I am actively weighing this migration as well for certain libraries. I have found one example in the Intercom SDK. You can see in their developer portal that there have been some developer issues in the past like this one, but they have been using Compose in their SDK for a while now.