I’ve heard that it’s supposed to be impossible to read in a dream – that the part of your brain concerned with recognising words is in the opposite hemisphere from where dreaming originates, but I’m sure I’ve seen recognisable words before.

Could be that, whilst dreaming, not all of your brain is active, so what you can do in-dream depends on what areas are ‘switched on’ during the dream. Pain or the expectation thereof might be enough of a jolt to wake you up though… maybe the same with any sensation. I think I’ve had limited sensation in a dream before, but the only specific example I can remember was just the last little bit of a dream before I woke up so the dream and waking reality might have been merging into each other.