My daughter's kinder teacher has decided that she wants to do a book exchange in the classroom (and she put me in charge).  Any suggestions as to how I should organize this.  How do I tell parents nicely that the books need to be in good condition?

Just be upfront with expections and most parents will understand why it had to be said.  If a parent does complain, it won't be unusual.  You might have a couple of the Dollar Tree books ready to replace a book or two that comes in that isn't in the condition you want. 

It isn't the child's fault if it isn't in the condition needed but they would still want to be part of the project!

Write up something that looks like the PBS oath and have it handed out to parents

Did you ever do this and how did it go?