I don't think you can force it to stop on that error. You'll have to log the errors, clean up the problem files and run rsync again.
Mike Bombich has a good page describing your error --
What are "Input/output" errors, and how can I resolve them?
"These errors are typically a result of media damage — some of the "sectors" on the hard drive have failed and Mac OS X can no longer read data from them. When that is the case, the file or files that are using the bad sector must be deleted and restored from a previous backup. Once you have deleted the files that were called out in the CCC.log file, you should be able to run your backup task again with success."
Even though he's referring to CarbonCopyCloner, it uses rsync to manage synchronizing the clone, so the same would apply here.
By the way, the version Apple provides (2.6.9) is out of date, and doesn't properly handle HFS+ metadata. The latest version is 3.0.7, which does support all the metadata for a proper backup.
Mike has a page (http://www.bombich.com/rsync.html) documenting compilation, installation and use of the new version. Be sure to check the switches and options he applies for backup.