We never read it in the questline. It is never used. At all. Its only used in the main questline of the main game. Now, while I am glad this allows you to get the "Discerning The Transmundane" quest without doing the main questline, it would have been nice if there was an option to say, if you already read the Elder Scroll (Dragon) that "I have already read it, it has nothing to do with the prophecy" or something like that. So you dont have to rebuy the Elder Scroll (Dragon) from Urag gro-Shub.
First, u can get the "Discerning The Transmundane" without doing anything other than visiting Septimus when u reach lvl 15 i believe. second, When u get to the point where u read the elder scrolls, u read all three of them, one by one. It's been a long time since i played that quest so i dont remember the details but yeah. Thats pretty much it