I'd consider it (if I had a second bike) (and someone REALLY REALLY wanted to borrow a 250 thumper) but I'd definitely have to think about it, 'cuz there's too much that could happen on either side and it's no one's fault.
Years ago, I borrowed my brother in law's car while mine was in the shop. He and my sister have a spare car in the garage for exactly this reason -- between the two of them, me, my parents, my aunt, even my cousins in the peninsula if it came to it having one extra vehicle wouldn't be the worst idea -- and while I was driving it, the drivers' side headlight burned out.
Do I pay for a new one? Does he? (In this specific instance, he had an extra bulb for the car and according to him it'd be silly to buy something he already has.) (But if he didn't, since I was borrowing the car for free I'd be an asshole if I couldn't pony up like five bucks for a new bulb.) (But if I were renting the car for any amount, isn't it on him then to make sure it's in driveable condition? I am paying him for it, after all.)
So if you rent out your bike and it turns out there was a nail in the tire that he says he didn't put there and you're pretty sure wasn't there when you loaned it out but aren't 100% positive, what happens? Who pays how much?