"I would have expected them to simply read the letters as they saw them"
Indeed. When I learned Morse code we were taught not to attempt to do anything more than copy down whatever we heard (the tutors went up to 20 wpm and sometimes pushed the dial on the automated sender to 25 or 30 wpm, which would have been possible in situations such as a land based station transmitting text for a cruise ship's on-board newspaper).
Trying to complete words (by guessing) was unlikely to be correct and given the speed of transmission, you'd have no time to go back to correct errors.
We are talking over 40 years ago though, so maybe there has been such a significant change to electronic and plain voice communicatons rather than code, so the crewmen may simply be very rusty as this is hardly a daily activity, I assume.