If it was in error, does this affect any merged code pieces/PRs submitted/merged after the readme was changed, or do the license headers per-file take precedence?
I have some experience with iText, so possibly I can answer. iText never released a version 4.2.0 for Java. The original forker misunderstood iText versioning and used the number of the C# version. At the time, iText versions for Java were 2.x, and C# were 4.x The code in the forked version is actually the last release of the Java version of iText 2.x, which was the last Java release under the LGPL/Mozilla license.
Thankfully, iText later coordinated release numbers for both platforms to 5.x numbering when they changed the license to AGPL.
So, you should be safe using this version of iText under LGPL or Mozilla, but it's a fairly old release of the library. If you're just using iText for your hacking projects, you're probably better off going with a more recent version.
At least some of the file headers say 2+, the readme says 3.0+, but this note was added after the fork, with commit https://github.com/daviddurand/iText-4.2.0/commit/312abf7b12... so it may be in error?
If it was in error, does this affect any merged code pieces/PRs submitted/merged after the readme was changed, or do the license headers per-file take precedence?