Weirdly enough I've found that I can read in dreams, I just don't remember what I read. I do however remember the images that were invoked by whatever I was reading, which is how I process words in the real world. There have been a lot of times I've found myself in the library in these dreams, looking at Art books I wanted to check out, and I definitely remember the covers, and getting excited about looking at particular books, but when I wake I can't remember any of the words on the covers! And when I try to remember, my mind pictures the cover images with gibberish!

When I read books irl, I see pictures like a movie. So when I'm reading in a dream (and it's usually some kind of trivial fiction) I also "see" what I just read, so I remember that I was holding a book, and what moving images I saw while I was reading it, even though I can't recall the actual letters (which I remember as looking like gibberish or sometimes a blank page). Unless this is called a "dream within a dream".