Collumngollum 'il' and 'li' are completely different. It would never be plausible to read 'spilt' as 'split' because they are two completely different words with two completely different meanings.
Reading the word 'Reading' as in the place, rather than 'Reading' as in the verb, is another matter. Both are plausible:
'Reading is so relaxing.' (The town called Reading is so relaxing to be in.)
'Reading is so relaxing.' (It is so relaxing to read.)
I would pronounce 'Windlace' as 'wind' as in the gust of air in an outdoor place, and 'lace' as of the fabric. I'd be content if I was corrected that in fact, the 'wind' was 'wind' as in winding a bobbin and 'lace' was actually 'lace' as in the end of 'solace'.
Either way, it wouldn't affect my understanding of the sentence, which would depend entirely on the context of the piece of writing. There's no indication, for instance, what 'it' is.