I imagine that dragon priests would be able to read dragon script, but whether or not the common Nord could read that script is another story. That's almost certainly true in the Fourth Era, and probably true in the Merethic. Ysgramor probably provided his people with literacy in such a way that he and his peers still retained their spiritual power over them because, while they could read messages written between each other, they still needed the dragon priests to translate the important spiritual stuff.
If the tablets lining the way to High Hrothgar are meant for public consumption (and considering their placement, they'd better be), then they would have to be written in a language that modern Nords could understand. Dragon script it's not, then. Considering Imperialization, it might be the same language that's prolific in all the other provinces of the empire, but considering that the Graybeards are a living link to a past that predates the empire by millennia (and considered extremely important to the Nord identity for that very reason), it's more likely that the language is still traditional Nordic (unless the majority of Nords no longer read the traditional script; I don't know of any evidence one way or the other).