It's pronounced "et cetera" because that's what it's an abbreviation of. Most abbreviations (unlike acronyms) aren't verbalized in their abbreviated form. You say "versus", not "vs" when you read it.

However, I do often hear Unix hackers say "et-sey" when referring to the "etc/" directory because precision is important there: the directory is not named "etcetera" so pronouncing it as such would confuse.