I suspect that it would've been a library to house some of the books the devs were planning to incorporat into gameplay to unfold the various histories of Drakan. I used a glitch to get inside the Monastery from the roof, which allowed me to go inside that room. There was nothing- not even a floor, but that isn't conclusive... because when you glitch inside of a structure in Drakan, sometimes there are very odd spatial weirdnesses- invisible floors, the ability to walk through walls... I walked right up to the Grand Savant's face because the table wasn't there, for example.
So... I think it would've housed books, but because the budget (time and money) was cut short near the end of D:TAG's production, books, among many other things were scrapped.
There were supposed to be sea monster foes, desert dwelling lizard riding knights... look up Drakan concept art on Google or Google's image search function to see some of the abandoned ideas.