Can a clear tube added on the outside of a water tank be used to read the water level?
There should be no fundamental problem with this, provided that the indicator tube is not closed at the top. You can either install a vented cap to keep debris out, or connect the top of the tube to the top of the tank. 

As a callow youth I assisted in the construction of a water tank indicator like that. I have also operated a steam boiler with similar indicators. If common experience is any guide, your most likely problems will be: 


Discoloration of the inside of the tube, from scaling or even from
algae, that makes it difficult to read the level. 
Hidden blockage that prevents the free flow of water to and from the tube. 
Damage or fracture of the indicator tube leading to a serious leak. 


Against (1) you should make the tube dismountable so you can clean or replace it. This will require a shutoff valve and a threaded joint or union. 

Against (2) you can rely on dismounting the tube and briefly opening the shutoff valve, or you can install a drain valve that you can open briefly, thus restoring your confidence that the flow is unrestricted. 

Against (3) you must install a shutoff valve. 

Note that the combination of the shutoff valve and a drain valve can also serve to drain the tank when necessary. If your tank presently has a drain valve, this might be a place to install the indicator without boring any more holes in your tank. 

Here is a sketch to show the order of the valves and fittings for a couple of possible tank drain positions: 

The order of the fittings must be: Tank Tap -- Shutoff -- Sight Glass Connection -- Drain Spigot. 

You will have to shop for the transparent tube and the compression fitting together. Don't bother with a big-box home supply store, go to a plumbing supply shop and talk to the oldest guy there.