In case of 読む, particle が cannot be used for the object.
It is grammatically possible if it reads
日本人は新聞
をよく読まれている。
Also in
日本人は新聞
をよく
読みになっている
is not correct - you need to add お before the verb 読む.
新聞をよく
お読みになっている
お~になる is the correct form of honorific and you cannot omit お here.
使う →
お使い
になる
遊ぶ →
お遊び
になる
読む →
お読み
になる
Again, you cannot use が here.
If you replace が with を, it makes sense as honorific form but not passive.
Honorific expression does not fit in this text, though, and if it is to be understood as passive, then it is a passive of damage/annoyance.
日本人は新聞をよく読まれている sounds more like someone (other than the Japanese) read the newspapers which belong to the Japanese and the third person(s) take advantage of Japanese or take away the newspapers from the Japanese, etc.
I agree with this particular point.