"Мы с Вами" types of construction

[david-us.livejournal.com]

In English we say "You and I are going to the theater." This causes many English speakers to say "Вы и я идем в театр" which, I understand, Russians never say. Instead, they prefer the construction "Мы с Вами идем в театр."

First of all, is the first sentence (Вы и я) grammatically incorrect? Or, is it just awkward sounding?

It seems verb conjugation is inconsistent with this construction. For instance, I recently ran across this sentence. "Брат с сестрой читают." There is a subject (Брат - 3rd person singular) and a prepositional phrase (с сестрой) - yet the verb is conjugated as if the subject is 3rd person plural which, in a way, makes sense - but is inconsistent with the subject. 

Very odd - and a bit confusing for us English speakers.

I guess one has to look at it this way:
Брат с сестрой = они

David Emerling
Memphis, TN