My perspective on this is slowly shifting (which I guess I could say about just about everything, but ya know), lately, I've noticed that a certain kid can and does read, very phonetically, here and there. But attending to the project takes a lot of effort, and therefore requires significant motivation, and this is not a kid who works well with extrinsic motivation.
So, DS3y knows how to read, but is not a reader. It's just not worth the effort to him to do the act of reading, and it won't get easier until he starts practicing. And he won't practice untill he decides to for his own darned reasons! And I think that's just right for him. A kid that likes extrinsic motivators, or (case in point) requires communicative access would be a really different situation. Like, a REALLY different situation.
On phonics vs whole word: My personal experience is that whole world should flow out of phonics, whereupon it becomes the expert reader's shorthand, but not er method. My experience with my kid is that he requests phonics often, but never whole word approaches EXCEPT for saying "what does that say," which is more of a whole text approach than a whole word approach! When I do catch him having read, there are often artifacts from his having sounded things out, in particular, a more "correct" pronounciation, which sometimes becomes permanant, and which I would very much like to kiss if I could find a material form to kiss.
Oh dear, I just re-read that. I'm in an interesting mood tonight. Sorry

on 18 month old non-verbal kids: DS3y was labelled with an expressive language delay at 19 months, we declined treatment. At 23 months, he was re-assessed as having the verbal output, not including articulation, of a 4 yr old and the same speech path recommended therapy to drag his articulation up to a 4 year level, because he was showing signs of problems seen in 4 yr olds with articulation disabilities. Erm. Wait and see. If yours has good receptive language the stats say you have a very very good chance of seeing the same pattern we did.