The clues we have been given point to the conclusion that at some point after Krusty Gets Busted, Krusty learned how to read. In Like Father Like Clown, Krusty is shown struggling to comprehend Bart's letter, which even the discriminating mind must admit is an improvement over holding Marge's letter upside down in Itchy & Scratchy & Marge.
Jaime Hernandez reminds us that in Lisa the Lionhearted, when Lisa was in the studio getting ready to record the voice for the doll, Krusty barged in and read all the cue cards for his doll! Quick to respond, Jeremy asserts Krusty wasn't really reading the cue cards.Since Krusty only said three or four of his most famous lines, it's not hard to convince yourself he knew them by heart.
Valerie Williams calls our attention to the episode in which Bart and Lisa composed the I&S cartoon "Little Barbershop of Horrors" under the pseudonym Abraham Simpson. At the awards banquet, while presenting with Brooke Shields, Krusty "read" from the cue cards "Here we are, a star of the Blue Lagoon and a blue haired goon." Self-promoting Krusty would never say something like that about himself!
For further evidence of Krusty's newly found literacy, Matt Samuel reminds us that in The Krusty Comeback Special, Krusty gives Lisa and Bart his address book. It is very doubtful that Krusty had all these celebrities write their addresses in the book themselves. He had to have written it. And as you can induce, it's impossible to be able to write without being able to read.
Which brings us to our (however temporary) conclusion. We believe Krusty was illiterate at one point of his life, but since reading is truly fundamental to his show, he taught himslef how to read. He may also be astigmatic or dyslexic, which would explain a lot of his difficulty reading, however not the fact that Krusty's literacy tends to come and go. Perhaps this is just one of those mysteries not meant to be solved...
If you can shed any light on the matter,
us. That is, if
you know how to read... =)