When Reading finished second in Division 1 in 1994-95, they became the only team since the introduction of automatic promotion and relegation in 1898 to finish runners-up at the second level, yet to be denied promotion. The size of the old First Division had been gradually reduced from the traditional 22 clubs to 21 in 1987 (2 up, 3 down) and 20 in 1988 (3 up, 4 down). However it was promptly restored to 22 clubs in 1991 (4 up, 2 down), only to be changed back to 20 in 1995 (2 up, 4 down). Middlesbrough went up as champions, but Reading in second had to make do with a play-off place. See the positional graph for a diagram illustrating the changes in division size.
Had the League made up their minds how many clubs they wanted, or reduced the size more gradually in the mid 1990s, as they had in the mid 1980s, then Reading would have had their (one) season in the Premier League. I don't think anyone seriously believes they could have stayed up with the infrastructure then in place at Elm Park. By the time they eventually gained promotion in 2005-06, this infrastructure had been largely put in place thanks to Mr Madejski's investment in the club.