What about "pieni lapsi jo osaa lukea"?
Nah... Sorry I can't explain why, but not outside a poem or song lyric.
I'd like to know that too, is there a grammar rule where jo should stand?
I think it goes after the verb. In English it can be on either side. "He is already running" and "He is running already" mean the same thing but maybe Finnish is more picky. I've noticed this with other words.
Word order on jo is confusing, but i guess it may just be one of those things you have to memorize
I think it's a word that more or less always comes after the verb.