Jason Dodd is currently taking control of the first-team after Gary Waddock left the club to join Wycombe Wanderers, following the sacking of ex-England Under-21 coach Peter Taylor.
More than 50 managers have applied for the vacant post already and Dillon is believed to be a front-runner.
He told the Post this month that he was actively looking to get back into management as soon as possible after he was released by Royals when Steve Coppell resigned at the end of last season.
The Daily Mirror however, has former Arsenal man Tony Adams linked to to the job and with no decision to be made on who will get the position until early November, get set for more and more speculation in the weeks ahead.