The messages were not encrypted. They could hear everything as well as anyone with the appropriate radio receivers could.
What was the reaction on the ground in the Soviet Union?
Are you asking about the Soviet government, or the people in the Soviet Union?
Tending toward the latter, Alexei Leonov, a Soviet cosmonaut, mentioned it very briefly in a dual autobiography he wrote with American astronaut David Scott. He said that while Soviet television did not cover it, the press (presumably the newspapers) gave the crew's problems a good deal of coverage. Unfortunately, he says little more than that.
For anyone interested, the biography is called "Two Sides of the Moon"; the paragraph mentioned above is slightly more than halfway through chapter 9 (page 260 in my version).