I recently picked up a Manual of the Planes in an old comic shop on its way to going out of business, for $3. It's fairly worn, but structurally sound (I only bought it as a reading/playing copy, I have a NM condition one already). When I started reading it, I immediately noticed it has a pretty strong odor, "mustiness" I guess would be the best description. The book has no sign of ever being exposed to dampness, no hint of mold or anything like that. It looks and feels more like it has been stored in a hot attic for 10 years. The few spots where the cover has worn through to the boards look like old cardboard. I've read the articles in the Library section here, but I'm not sure which advice, if any of it, applies. Normally I wouldn't care about a faint odor (I'm a smoker, though I don't smoke inside the house, and certainly nowhere near my collection), but this one really reeks when it is open.

The book is now sitting on a stack of other reading copies of the AD&D hardcovers in my library/living room. My questions are these: 1) Is there anything that can be done to ameliorate the odor? 2) Should I be worried about dry rot "infecting" the other hardcovers in the stack?

You can also go to a Canadian Tire or general hardware store and buy an odor eliminator that basically has activating charcoal in it.  It also comes in a plastic container with vents so you don't have to worry about it getting on your books.

I have used this a few times now and just open it and drop it into a box with the books, close it up and leave it for a month or two.

You should pretend that you've actually brought the copy along with you on expeditions to alternate realities. The smell comes from the exotic chemical composition [brimstone etc.] found on other planes.