It's now an entry in OED, I hear. Anybody know what the actual OED entry says?
The OED doesn't actually have an entry for '♥', or '<3'. It has a new definition for 'heart':
trans. colloq. (orig. U.S.). To love; to be fond of.
As to how to pronounce '<3', I think it would generally be the same as heart. To orally spell it out I would say "less than, three"
It should be noted that the OED did not add "<3" - rather it added the dingbat: ♥
In running text, it is pronounced "heart," as in the bumpersticker, "I [heart] my dog's head."
Many would pronounce it "heart" (in the context where "<3" is used as a synonym for "love"). For example, pronouncing "I <3 Huckabees" as "I heart Huckabees".
"<3" carries an unorthodox choppy Internet-meme sentiment that "heart" carries along orally.
I would pronounce it as either love or heart, and orally spell it as less than three.
It is an internet meme that has gained popularity offline as well. The heart symbol ♥ is not always easy to replicate, especially in plain text formats such as text messaging, or when using mobile phones to post messages to services such as Twitter and Facebook. Therefore, like emoticons (smileys) that encourage you to turn your head to one side to 'read' them :) the <3 was incorporated into the jargon to represent a heart. The meme itself often contains references to less than three (but I have never seen smaller than three, as an aside), in terms of "I less than three you", seen in these t-shirt designs:
I'd pronounce it either "love" or "heart". It makes more sense to say "I love <popstar-of-choice>", but the "I heart <name>" version is commonly heard colloquially (when imitating this form), which comes from the practice of writing a heart symbol for love (as on the iconic "I ♥ New York" T-shirts, for instance).
"less than three" or "smaller than three", depending on the context.
If you could provide a sample sentence containing the phrase, it would be easier.