I’ve heard both, depending on usage.
Generaly /red/ is used when it’s explaining how you should pronounce something when reading it aloud. “Dynamic Hyper-Text Mark-up Language (read [/red/ aloud as]: DHTML)”. I really can’t see this one cropping up too much outside of communications manuals.
When it’s meant to provide subtext, I’d pronounce it as /reed/.
I really don’t see any justification for it following the tense of the sentence
“He is reading an adult magazine (/reed/: Porn).”
“He was reading an adult magazine (/red/: Porn).”
It’s a structure completely independent of the ongoing narrative- a little aside directed at the reader. It should be the same every time, either /red/ or /reed/. I’d say /reed/.