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Here is a quick demo of copy and paste on the newly released updated Windows Phone 7 emulator, uploaded by pocketpc.ch.
They note it works simply and with no frills â€“ text is selected with a long press, an icon pops up above the text and markers appear which can be moved. By tapping on the icon text can be copied to the clipboard, and an icon to insert the text appears above the keyboard.
As mentioned above, not elaborate, but it does obviously make the office integration in Windows phone 7 100% more useful.