Red herring, that is. Copy/paste would work fine without any support from the iphone os, since it would be handled in javascript. (That is, copying/pasting within the google docs system would work as long as the page works. you could not, of course, copy/paste to other iphone applications without OS support).
The interface would be sort of a challenge, though, as the web browser hides a lot of events. (The main issue would be to define an interface to allow selections, since iphone safari merges buttondown and buttonup). Would have to do something lame like touch the start of the selection, then press a "extend selection" button and touch the end of the selection. Very 1980's.
Since the rumor is that os-wide copy/paste is supposedly coming when the file browser comes, presumably they'll either unmerge the events or add some sort of "select" gesture in the future.