I appreciate the use of a flow chart, makes it easier to see the logic behind your thinking.
The hamming function will also be useful for error correction!
It would be useful to add more details on how you will go about reading the input files
o Will you save to dictionary or use temporary variables?
o Will you use a while loop? For loop?
I would add a section on how you are going to output a count of all the matched read-pairs, index swapped read-pairs, and poor quality/undetermined read-pairs
For your functions:
Your hamming distance function description is good, I would just add a test output to complement the test input.
For your pseudocode:
For your functions: