I have the requirement to allow users to view the content of a document library, including browsing through folders, but not actually open the individual files.
There doesn't appear to be a permission to restrict users from opening files, but still display them.
Naturally it is an option to create a view that doesn't have the 'open link' in it, but that doesn't stop users from manually constructing the URL. Also there are other options in the context menu that I want to be available for the individual documents.
I realise that a similar question has been asked before.
This isn't a complete answer, but maybe it will point you in the right direction and you can get it to work.
In a Team Site, there are the following Permission Levels:
Read: Can view pages and list items and download documents.
View Only: Can view pages, list items, and documents. Document types with server-side file handlers can be viewed in the browser but not downloaded.
The only difference between the two is that View Only has Open Items unchecked:
Open Items - View the source of documents with server-side file handlers.
Unfortunately, according to my testing and here and here, it does not work. At least not with Office documents.