Il straight before nous makes it look like 'He we' or 'He us', I assumed it was an error.
Hey Jacko - think of the pronouns before the verb as grouped together with that verb. So for this sentence, il nous lit un lettre, the nous comes before the verb, so think of it as a unit "nous lit". That unit is "to us he reads", or backwards from English "he reads to us". The same can help you with longer sentences that contain multiple pronouns, so you don't get confused :) That's what I do - hope it helps!
So does "nous" not change when it's a direct object pronoun thing? What does "on" mean then?
When you are given "we" or "us" in an English sentence, you translate it by "nous".
If you are given "on" in a French sentence, you can translate by "we" or "you" depending on context.
On is akin to saying something like «One must always stay hydrated» or «You should always brush your teeth» where you is not specifically you, but you in the general sense, like all of you, anyone, everyone
How would this sound differently if it were "ils nous lisent un journal"? If it sounds the same, shouldn't both be accepted?
As such, "un journal" is a newspaper. If I had to back-translate your suggestion, I would say "il nous rit un journal intime".
I've seen some translate just "un journal" as "a diary" though without "intime" written afterwards.
The audio skipped right past the nous.
Il lit un journal
Il nous lit un journal