I think I'm probably better at reading situations than I am at reading people, and I've gotten very good at reading situations. I'm trying to tell people more openly and directly what I think they might not be saying. So for example, I was in SL talking to someone about a samurai outfit I had on. I had said something they didn't understand, and when I expanded I knew I'd included more jargon, yet they said something like, "Cool." So I said, "It's okay if you don't understand or aren't interested. We can talk about something else." To which they replied, "No, I'm interested." To which I replied, "Okay, I'll continue." And I went on to talk about it a bit more. I'm still really not sure if they were being truthful or polite.
On the other hand, if someone comes to me to talk about something that happened to them with another person, I can usually identify situational patterns in the behavior of both people and from that deduce patterns of thought and/or feeling-states.