Yes, banned users can read posts. When you're banned, the only thing it prevents you from doing is reading chat, making posts in chat, making wall posts, and making any sort of post (comments, answers, questions) on any section of the site. Your user still exists and you will not be taken off of the users page. I'm pretty sure that it also prevents you from changing your username and profile, but I might be wrong. Also, I'd like to mention that, unless things have changed, you're unable to view the rules when you're banned, which is kind of strange.
