As a platform, Arduino is still somewhat in its infancy (compared to more mainstream areas of programming). As you've indicated, that means there aren't all that many libraries for it yet, and indeed many of them are now shipped with the official IDE as standard. Additionally, it can be very hard for a new Arduino user to know where to look, where to ask, or what to use to solve any given problem.
However, there are already new libraries popping up on places such as GitHub. I would expect more and more to appear as time goes on and the Arduino user-base expands and matures. That means any answers recommending a library will probably go out of date before very long, especially as more boards/revisions/variants are released.
What we want to build up here is a long-term Q&A resource, so I think we have to treat broad questions about library recommendations as generally off-topic. As with everything else here though, it needs to be done carefully, with a kind nudge towards a more suitable venue (such as the Arduino discussion boards).
That's not to say we should never suggest libraries in answers though. I think it's still OK to suggest a library if it's an appropriate answer to a specific problem, especially if it relates to a core library which is likely to be maintained long-term. We just need to discourage people from asking for recommendations.
I think it should be on-topic.
A questions asking for a library to do X, is just a rephrasing of "Is it possible to do X? How?". If the second is on-topic, then the former should be as well, considering exactly the point that you mention. There are not as many libraries out there for Arduino. Of course, the usual question quality rules apply, such as that the scope of the question should be reasonable.
I do believe that they should be allowed.
Arduino is a line of products and their accessories. (Also with their code.) SO is different here. Some users are even pushing allowing shopping questions. This is very similar to a shopping recommendation.
I say that we leave it for now. If it becomes a problem that it becomes only finding libraries, then the moderators implemented by then will have to clean up the problem before it grows. It may seem like a nuisance, but I do believe that if we can attract another user this way, it can only help us. Plus, there are only a limited number of libraries available out their. I've noticed a pattern with Arduino that people tend to create similar projects.
My gut feeling (coming from Stack Overflow) is that such questions are off-topic.
Remember, this isn't SO. We were given a canvas by Stack Exchange to build our site the way we want it. The sites tend to follow a pattern, but if all of the sites were practically the same, there would be no need to open up another site. From some work on different sites, each community is different. If it will serve us good, why should we not do it just because Stack Overflow doesn't?