The Material Library is part of the install - but there is an option to download it separately if required, so that running the installer (on a second machine for instance) doesn't have to do the downloading all over again. EDIT - and yes, if it is already installed and you run the installer again, it won't download again.
The functionality to add your own materials is not in this version of the Material Library - this is just a first iteration, and future versions will expand upon the functionality and features (which means yes, at the moment you won't be able to add your own materials). As to whether the Material Library will see a "standalone" update before Corona Renderer 2, I can't say at this time - development plans may not be far enough along to say if that would be done, since work on version 2 is only just beginning :)