The read pattern isn’t used by the smart card to validate the disc, it’s used by the installer to communicate with the card.
The card could have a large photodetector covering several circular “tracks” of the disc, say tracks 1 to 1000 (I know CDs aren’t separated into tracks, but cut me some slack), and a way to change the reflectivity of other tracks, say an LCD covering tracks 1000 to 2000.
The installer tells the CD-ROM drive to read tracks 1, 500, 600, 300, and 1000 to activate the smart card. As the drive reads from the tracks, it shines a laser on the photodetector. The smart card detects that particular pattern and begins outputting a decryption key with the LCD… maybe one bit of the key per track. The installer reads from the output tracks, and where the LCD has been turned on, it reads a 0; where the LCD has been turned off, it reads a 1.
There are still technical problems: The behavior of the laser is uncontrollable. Maybe some drives leave the laser on whenever the disc is spinning, so the laser would end up striking every part of the smart card input whenever the head moves past it.
The smart card can’t be powered by the laser alone, it would need a battery. What happens when the battery dies, you have to buy a new CD? (On second thought, that’s probably exactly what they want you to do.)
The smart card won’t work without a specially designed program to use it. So this won’t work on audio CDs and probably won’t work on DVDs.
And practical problems: Once the key is found by crackers, the encryption is broken; all you need to do is download a cracked version of the installer that includes the key. It’s possible (though expensive) for each disc to have a different key, but in that case, it’d still be relatively easy for crackers to produce an ISO, so you can download it and burn an unencrypted CD.