If you’re removing a device, it shouldn’t matter if the data is unreadable (that’s probably why it’s being removed, no?)

I interpreted "being able to read or reconstruct all data" as meaning that there must exist a good valid copy of each chunk of data somewhere in the array, but not necessarily on the device that you're trying to remove or replace. That interpretation matches my experience, which is that btrfs can correctly handle replacing a drive that is dead or dying. You should certainly expect errors if eg. both copies of a chunk in a RAID1 are lost/corrupted.

If you have a read error can you expect to recover the rest of the data?

I’d hope so. Just because one bit is missing from a file, doesn’t mean the rest of the files are gone.