No. I think this is where your logic is off: "Furthermore, I think that if I try to read an entangled state, it's as if I am reading the entire state all at once"
You can't read the entire state. A quantum channel where you send n-bits lets you read n-bits, not exponential in n-bits.
There is indeed reduction of signal as you increase temperature. Under the error correction theorem, you can amplify that signal back to full strength as long as you are under a threshold temperature (but with ever-increasing resources as you approach the threshold temperature.)
Also this: "This is going to generate heat, and the rate at which I can dissipate that heat is bounded by the speed of light". Sure, the heat has to be transferred out of the system, which takes time that is bounded by some distance divided by the speed of light. But the qubit is on a 2D chip surrounded by a 3D refrigerator. The distance doesn't necessarily increase with increasing qubits.
You can't read the entire state. A quantum channel where you send n-bits lets you read n-bits, not exponential in n-bits.
There is indeed reduction of signal as you increase temperature. Under the error correction theorem, you can amplify that signal back to full strength as long as you are under a threshold temperature (but with ever-increasing resources as you approach the threshold temperature.)
Also this: "This is going to generate heat, and the rate at which I can dissipate that heat is bounded by the speed of light". Sure, the heat has to be transferred out of the system, which takes time that is bounded by some distance divided by the speed of light. But the qubit is on a 2D chip surrounded by a 3D refrigerator. The distance doesn't necessarily increase with increasing qubits.