I have a 120 vac receptacle where my dw and disposal were plugged in. I am going to use an air switch to turn the disposal off and on. Therefore I removed the switch that used to control the disposal and shorted the 2 wires together with a wire nut. Back at the receptacle, there is a neutral, a black, and a red wire. The black and red wires each go to one side of the receptacle. (coupling tab is broken off) Problem is, I measure 120 v on one side of the receptacle, but only 27.5 on the other. There is about 52 volts between the black and the red. What the heck?

You'll get strange readings like that because you are reading through the appliances. Always unplug everything when taking voltage readings.

Separate the wires at old switch, safe them off with wirenuts. You can save them for future use.

At the receptacle, the black will still feed the receptacle for the dishwasher, as well as feed the line side of your airswitch. The load side of the airswitch will be new feed to disposal--you will abandon the old red wire. You will need to either replace receptacle with one that doesn't have tab broken off, or add #12 jumper wire.