I need to play with this more. I know a few people it might be useful for.
To read the character where the VoiceOver cursor is focused, press Control-Option-C. Press C two times to hear the character spoken phonetically. Then press Control-Option-Shift-Right Arrow or Left Arrow to move the VoiceOver cursor to the next or previous character and read it.It's not trivial to figure out, but with practice it makes sense. In VoiceOver mode there's a black selection box that appears over the part of the screen that's being inspected. It didn't work in a Firefox window, but it worked in TextEdit. I suspect it only works with Cocoa applications.
To read a word at a time, press Control-Option-W. Press W two times to hear the word spelled, and three times to hear it spelled phonetically. Then press Control-Option-Left Arrow or Right Arrow to read the previous or next word.
To read a line at a time, press Control-Option-L. Then press Control-Option-Up Arrow or Down Arrow to read the previous or next lines.
To read a sentence at a time, press Control-Option-S. Then press Control-Option-Page Up or Page Down to read the previous or next sentence.
To read a paragraph at a time, press Control-Option-P. Then press Control-Option-Shift-Page Up or Page Down to read the previous or next paragraph.
I wonder how it compares to commercial Windows screen readers.