It depends: I know a man and he knows everything about cars, engines and gears. He can repair even the hardest job, but yet he can't drive. If you want to swim, you can read as much as you like but until you get in the water, you will never know the joy.

I think the most important is to understand a language while you're reading or writing. (For example, understanding the grammar of a language.) Without understanding, it's pretty much meaningless to do so. It is key in reading and writing a language effectively! :)

Certainly. When I was in graduate school, the "language requirement" was solely a reading requirement. In my field they felt that it was important to be able to read scientific papers published in certain important languages. The Modern Languages department actually offered a course in "French for Reading Knowledge," and I had to pass an exam solely in reading French to completely my degree. (I took the course, crammed for the exam, just barely passed it, and promptly forgot everything)