Kara is, at best, what I would consider moderately/semi literate. She can read well enough for everyday use, but I don't picture her being able to easily read anything past what I was reading in kindergarten. My reasoning on her ability is that while there were certainly other skills that would've been much more important for her to learn/for those who raised her to know, the ability to read a shipping manifest, ledger, or leaf through a book to determine its value would have been useful.
As for the literacy/illiteracy rates of Eorzea, I personally have problems with what the devs have claimed on the matter. They say that literacy is rare, reserved mainly for the rich/privileged. However, the examples we're given in-game, to me, don't match up with this. We pass notes between common people, recover 'religious' pamphlets that were meant for the poor and refugees, deliver well-written (and even eloquent/poetic) letters from and to bandits and poachers, and hang job postings for everyday workers. And in all this, there is -only one- NPC that can't read... and her inability to read is because "I never bothered to learn my letters". So I personally run on the assumption that a great deal of Eorzeans are actually literate, just the average level is what I'd expect from, at best, a third-grader. Which from a lot of our Real World expectations, could possibly come off as being illiterate.
As for the literacy/illiteracy rates of Eorzea, I personally have problems with what the devs have claimed on the matter. They say that literacy is rare, reserved mainly for the rich/privileged. However, the examples we're given in-game, to me, don't match up with this. We pass notes between common people, recover 'religious' pamphlets that were meant for the poor and refugees, deliver well-written (and even eloquent/poetic) letters from and to bandits and poachers, and hang job postings for everyday workers. And in all this, there is -only one- NPC that can't read... and her inability to read is because "I never bothered to learn my letters". So I personally run on the assumption that a great deal of Eorzeans are actually literate, just the average level is what I'd expect from, at best, a third-grader. Which from a lot of our Real World expectations, could possibly come off as being illiterate.