We live in a quantitative, statistical world. Fiction is qualitative, emotional and personal. Naturally, reading more fiction makes you a foil for the ubiquitous forces of our mechanistic world, and you are a better person, not a tool, of the system. But it also makes you more isolated, and alienated, because not only does reading take you away from socializing with others, but the world does not reflect back this humanity, but is surely at odds with it.
Yes. Reading fiction has the ability to open up a person's mind in a way that will allow them to imagine. Imagination leads to creativity, and creativity leads to innovation. The ability for a person to innovate effectively can have a huge impact on how successful they are in life, employment, social interaction, etc. In this respect, I believe reading fiction could potentially make someone a better person.
Reading fiction does not make one morally or intellectually superior ton anyone else, but it can certainly open one's mind. This can make someone empathize with a group of people with whom he or she would not otherwise have done so. In that sense, reading fiction can help make someone a better person.