Does 意大利 ever get read as 意太利?
Yes. And sometimes, for an ironic/sarcastic vibe (not necessarily negative) and under a very informal situation, people would write 意呆利/意呆梨. As the transliteration comes mainly from English，where in the Italy the æ vowel doesn't exist in Chinese pronunciation, and 太 seems to be closer to the English word Italy.
And again, in formal, even the slightest sense, it is only correct and proper to use 意大利。