I have the same problem, but the environment is a bit different iTunes for Windows 12.7.4 76 on Windows 7 Pro and iOS 11.3 on iPhone SE. I have 4070 pixs on my computer that I sync with the iPhone. All pictures are a reduce size no more than 850 KB per. iPhone is a 64 GB with 43.49 GB still free. I left the computer overnight trying to sync, waiting in the 5th cycle of the syncing cycle...in the morning it still saying ..."reading the iPhone pictures."... but never did. I restarted the process.
The only way I was able to sync my iPhone SE with the pictures on computer, was to first d-select "sync Photos" to remove all the pictures from my iPhone. Than I removed the folder of pictures that are stored on my computer by the iPhone name: "iPod Photo Cache"(usually located in the same folder where you keep your pictures on the computer that you sync with iPhone) . Than I synced all folders/picture and it worked.
Caution: when you delete all pictures and remove folder "iPod Photo Cache " from your computer, you will lose the "People" in "Albums" that are grouped by same type of faces...BUT do not worry, iPhone will rebuild them again as you had them once you synced all your pictures, just plug the phone in and lock the screen...in 30 to 40 min (4070 pix's for me) will be done....
This was not a problem with previous iOS and iTunes before I updated to new releases a week back...Hope they fix it !!!