I think for preservation purposes, paper is king. But of the millions of books sold and disposed of each year the fraction needed to be in print for preservation purposes are far lower than the total produced. The hot author of the month or even the decade is probably much more environmentally delivered electronically. If you run a special ereader that might change the equation but if you're reading it on your phone, pc, tablet that you already have then the largest environmental cost is pulled out from the electronic solution. Storage and delivery for digital books is very small. Much lower than trucking a car or plane across country to deliver a physical book.Shifting to PDF only is not really any more environmentally friendly. You still have ongoing power and online storage costs for the material. Honestly, PDFs may be worse in the long term than physical books.
Media rate is not a subsidy. It is handled differently than other mail types and is often cached and shipped in bulk with slower delivery times.
I can't find anything that says Media Mail is anything other than either a loss or at best non profitable. That means in effect it is subsidized by the other mail offerings.