It is pronounced /rid/ ("reed").
Here is what the OED has to say about this question:
9. a. To adopt, give, or exhibit as a reading in a particular passage.
Hence, to substitute or understand for
(what is said or written).
1659 HAMMOND Acts xv. Annot., The Æthiopick
and other interpreters retain.., what
you would not have done to your
selves, do not ye to another,.. for
which other Jewish writers read, doing
as they would be done to. 1697 BENTLEY
Phal. 20, I cannot..comprehend why the
most learned Is. Casaubon will read
σπεύδοντα in this passage, and not
σπένδοντα. 1759 RUDDIMAN Animadver.
Vind. Buchanan 60 Instead of..
sexagesimo quinto, we should read,..
sexagesimo nono. 1847 MADDEN Layamon's
Brut. III. 346 For Lovaine some copies
of Wace read Alemaigne. 1868 M. E. G.
DUFF Pol. Survey 16 For monasteries,
we should read convents,
mission-houses, and seminaries. 1966
‘A. HALL’ 9th Directive xxi. 193 For
snatch read abduction. For swop read
exchange. Never a bloody spade. 1967
Listener 4 May 593/2 Links between the
cultures of ‘Indonesia’ (read
southeast Asia) and west and central
This OED quote was featured in a Metafilter thread on this very question, and there is a nearly identical Metafilter thread two years later. Both feature lots of opinions and argumentation, but the OED argument (among others) makes the answer fairly clear.