RustyGrom over at XDA- Developers has been digging around in the Windows Phone 7 emulator, and found a reference to copy and paste functionality in the place where it makes the most sense, the Office application.
In his hex dump of Officeres.dll he found the following text, from what appears to be a menu:
Â± S e l e c t A l l P a s t e C o p y C u t â‚¬ U n d o
&@D o n e â€˜@C a n c e l Â C o p y / P a s t e [email protected]S e l e c t T e x t â‚¬ @P a s t e &@ â‚¬ â€˜@
Either the text is a relict from older versions of the software, or we may see copy and paste sooner than we think in Windows phone 7.
More at XDA- Developers here.