The k'suva text varies slightly depending on whether the bride is a virgin, independent of whether she has been married previously. (For one thing, the amount of money mentioned in it is different; for another, the word "בתולתא" is omitted from the k'suva of a non-virgin.) Now, there's a custom to read the k'suva aloud during the wedding ceremony. I have heard that, in the case of a non-virgin bride whose non-virginity may be a source of shame (e.g., she has never been married), the person reading the k'suva aloud reads it wrong deliberately, reciting instead the text of a virgin's k'suva, so that no one else hears that the bride is a non-virgin. I am looking for a source that indicates that that custom (of deliberately misreading the k'suva) is appropriate, inappropriate, practiced, or not practiced, or any source or provenance for it.
For starters: in Ashkenazic custom (which I think the questioner was assuming), the kesubah has already been signed (i.e. executed) before the chupah, so the reading is nothing more than a pause between parts of the ceremony. It's accomplishing nothing of a halachic nature any more than reading the latest stock numbers would be, hence many rabbis have been lenient in exactly what's read.
This gets a bit trickier in the Sephardic world as the witnesses are signing it on the spot, under the chupah. They're announcing it as it's executed. It could seem weird to proclaim you're executing a document with terms A when you're secretly executing a document with terms B. I don't know what Sephardic rabbis would say about this.
Just to clarify: if a woman was born Jewish and never previously married, and was never involved with a non-Jewish man, then the appropriate word to both read and write is in fact besulta.
Igros Moshe OC4:118 -- addressing a religiously-serious young woman trying to repent for what she did in college:
Regarding the writing of the kesubah, there is no need to tell the officiating rabbi (about the bride's past actions) -- once the groom signs on the kesubah he has agreed to the kesuba of a besula, even if she really isn't, so long as she's not misleading him, as he has agreed to obligate himself in the kesuba amount of a besula ... and if she marries the fellow with whom he she had relations, it is more proper to write besula, as explained in EH 101, and the rabbi [discussed in that responsum] acted properly.
Even if she had relations with a different man than the one she is now marrying, if the relations were with a legitimate Jew than she is still kohen-eligible and hence this affects no laws, only a monetary sum - if the groom knows this and opts for the kesuba of a besula, they can write it as such -- and therefore [the couple] should not tell the officiating rabbi -- nor anyone else [about the bride's past indiscretions], as I have written above [we don't believe in confessing sins to human beings!].
The questions come up when it's not widely known that the bride was divorced, widowed (very unlikely), converted, or had a non-Jewish boyfriend at some point. (In the latter case ideally it'sa is written if that's actually known, though don't ask me how often rabbis actually ask about this.)
Rabbi JD Bleich has a yutorah mp3 in which he says if the bride is visibly pregnant, you can still in theory write besulta, but if so the rabbi shouldn't sign as a witness on the kesubah. While technically valid, it makes the rabbi's personal credibility look shaky.
As to your question, I suspect a lot of this remains oral tradition, not written down, for obvious reasons; I was told of an instance where Rabbi Yaakov Kaminetsky had someone write a dummy kesubah for the purposes of reading, and I spoke with a seasoned moreh hora'ah who had a similar instance where he said "who says that what's written there is what you have to read?"
Afraid I don't have written sources.
This is an excellent question that is best asked to your local Orthodox rabbi.
One important aspect of the question, which should not be minimized, is the public humiliation to the bride, who will be mortified that her lack of virginity will be revealed to her friends and family. Chazal say (Berachot 43b) about embarrassing someone in public that it better to cast oneself into a fiery furnace, that one who embarrasses someone in public has no share in the world to come (Avos 3:11) and that it is comparable to shedding of blood (Bava Metzia 58b). On a day that everyone has an obligation to cause the bride and groom to rejoice, to cause a measure of public humiliation would seem non-ideal, to say the least.
Another important aspect of the question is the halachic importance of reading the Ketuba under the chuppa. Rav Herschel Schachter traced the development of this practice through the Geonim and Rishonim, and concludes that it has a mere status of hefek. Thus,
Yes, even if a parrot or a monkey would read the kesuba, the marriage would be one hundred percent valid. Strictly speaking,the reading of the kesuba is not at all a part of the marriage ceremony. This minhag was introduced in the days of the rishonim after the geonim had done away with the ancient practice of having a long pause (of several months) between the erusin and the nissuin. When a young girl would be married for the first time, the pause would be "a yohr un a mitvoch". The date for the chuppah would be set for the first Wednesday following the entire year after the erusin (see Talmud Kesubos 2a). In the days of the Talmud there would have been no objection if "borei pri hagoffen" would have been recited over the cup of wine used for the six brachas of nissuin, despite the fact that that same bracha had already been recited in connection with the cup of wine used for the "birchas erusin" 1, because there was a pause of months in between the two occasions. However, once the geonim introduced the practice of having the nissuin follow immediately after the erusin, the reciting of the blessing of borei pri hagoffen the second time seems very strange! There was no longer a pause of several months between the two brachos, but merely a pause of a few moments, and the reciting of the second bracha really seems absolutely unnecessary! This is what prompted the rishonim to institute the slow reading of the kesuba in between the erusin and the nissuin, to establish a hefsek between the two "brachos al hakos", so that the second borei pri hagoffen will not seem so superfluous. It is for this reason that many have the practice that if someone is scheduled to speak under the chuppah, or if a chazzan is going to sing something, that these take place right after the reading of the kesuba. The greater the pause, the better. Some rabbis have the practice of reading the kesuba very quickly. I remember that when Rav Eliezer Silver zt"l would be called upon to read the kesuba at a chasuna, he would do so very slowly. Since the whole purpose of krias hekesuba is to introduce a pause between the brachos over the two cups of wine, the longer the pause - the better! (See Beikvei Hatzohn pg. 268.)
If it is a mere hefsek, a pause, then it stands to reason that one can (and should!) change what is publicly read into the microphone, so long as the ketuba itself is written properly, and the eidim and husband understand what is really going on. See Shalom's answer for an example of a Gadol, Rav Yaakov Kaminetzsky, who would read a dummy kesuba. The statement of the "seasoned moreh horaah" who said, "who says that what's written there is what you have to read?" reflects what I have heard as well.
For a practical example of someone who recommends changing the out-loud reading of a ketuba to avoid embarrassment to the kallah (though the example is to not read a specific name), see Minchas Yitzchak Chelek 5 siman 44.
Note that the witnesses and the chassan should know what they are signing and agreeing to. Of course. I don't know that "Our modern custom of reading the Ketubah comes from two primary halakhot in the Shulhan Arukh", that Rabbi Michael Tzaddok writes, is correct, and would like to see some concrete support to that speculation, contra the position that it is a mere din in hefsek that sparked the practice.
Especially since I've quite often seen the ketuba signed not under the chuppa, but at the chossan's tisch, and yet the ketuba is still read under the chuppa, we see that all it is functioning is a hefsek.
In those places where the minhag is that they also sign the ketuba under the chuppa, then perhaps there is a fear that the groom and witnesses will mistake the contents of the ketuba, such that a deliberate misreading would not be appropriate. I would like to see a written source of e.g. Rav Ovadia Yosef saying this. Which apparently there is, but I would like to see it inside before editing this post to include it. I would also like to see why the groom and witnesses cannot be instructed as to this portion of the ketuba contents off-mike, so that every gossip in the audience is not privy to the sordid past of the kallah.
To intentionally read the Ketubah errantly is problematic. Our modern custom of reading the Ketubah comes from two primary halakhot in the Shulhan Arukh:
Choshen Mishpat 45:2
2 If the Head of the Beis Din is familiar generally with the document, and his personal scribe who he trusts and who fears him reads it to him, he may sign the Shtar without reading it personally. However, other individuals (or a Head of Beis Din relying on someone else’s scribe) may not rely on a different person reading the contract and may not sign until the witness reads every word of the document. Rema: Some are of the opinion that the witnesses may sign if two people read the document to them. If the witnesses are not familiar with the language in which the shtar is written, those reading it may also translate the document. It seems to me that this view is the correct one. There are those who say that they may read the document in public and the witnesses can rely on this to sign without reading it themselves, as a scribe would be reluctant to lie publicly, and in this case they will have a status identical to a Head of Beis Din and his personal secretary. This mandates that the public reading, which is being done for the benefit of the witnesses who will then sign the Ketubah, must be accurate. If it is not, it has the ability to counteract their Eidut, and thus cancel the Ketubah, which brings about problems of it's own.
Even HaEzer 66:13
13 In a place where the Kesubah is habitually signed only by those who are qualified to act as witnesses, a person who cannot read must not sign [the Kesubah]. Rama: Therefore, an am ha-Aretz (ignoramus) who wants to divorce his wife, and says afterwards that he did not understand what was written either in the Tenayim (conditions) or in her Kesubah, is not to be believed, because [we assume] that the witnesses certainly did not sign the Kesubah without having first testified orally in his presence to what they put their signature. (The Responsa of the Rashba, chapter 629).
Thus we also rely on an accurate reading of the Ketubah to obligate the husband in what is written within it.
Intentionally misreading the Ketubah then would cause very serious problems halakhically. However that is not to say that we are not concerned about the possible embarassment of the bride.
Rav Benayahu Shmueli writes in his sefer Kavvanot of the Chuppah in the name of Rav Ovadia Yosef(sourcing Yabia Omer but not giving volume and chapter):
אם הכלה בעלת תשובה שאין חזקת בתולה, בכדי שלא לביישה, יש להשתדל שהחתן יסכים להתחייב במאתים זקוקין וימחק רק תיבת "מדאורייתא" וכן כל מקום שנא' "בתולתא דא" ימחק ולא יכתוב כלום אלא מרת פלונית תחי' או יכתוב "כלתא דא" או "איתתא דא", ואז אפילו אם נבעלה להעכו"ם שנעשית זונה ואסורה לכהן לא יצא מכשול אחר שכל אחד יראה שנמחק בתולתא דא.
If the bride is a Baalat Teshuva that does not the chazakat(assumed status) of a Betulah(virgin), in order that she will not be embarrassed, one should do his best to see that the groom agrees to obligate himself in the 200 Zukim and then erase just the word "m'd'oraitta", and also every place that there is written "This Betulah" also erase and write nothing, rather just her name or write "This bride" or "this woman" and thus even if she had relations with a non-Jew that would give her the status of a Zonah and make her forbidden to a Kohen this will not become a stumbling block to another as everyone can see that the "this virgin" was erased.
In my experience and from testing in the Israeli Rabbinut this is the general custom of Israel.