Supposedly an impossible thing to do, since dreaming is done with the right brain, and reading is done with the left brain, and the one cannot create the functions of the other. This is almost accurate. During sleep, certain parts of the brain are inactive, including those responsible for making out forms of letters and words (parts whose failure causes disorders such as dyslexia or dysgraphia). However, this does not preclude reading, only making out the forms of letters and words.
There was a study on the relation of dreams to memory, in which amnesiacs who played heavy amounts of Tetris reported dreaming about the game. Any sufficiently intellectual addictive activity puts enough strain on the memory to affect a person's dreams. This is straightforward enough in the cases of games like Tetris or Devil Dice, but also applies to activities such as text-based MUDs or Everything.
In my days of psychological addiction to MUDS and to Everything, I have often dreamt of doing these things, as odd as that might sound to someone less neurotic. I sometimes dream about reading books, only to be disappointed when I wake up and realize that I can never figure out how the story ended, since it was being written by my subconscious and no hard copy exists. Once I dreamed that I nearly missed an important math test because I didn't have a ticket marked "5 pm" and everyone else did.
What is impossible in dreaming is the sense -- not the perception -- involved in reading. Therefore it is possible to read in a dream, but not to focus on actual letters and words.