Interesting question.
We do live coding rounds using Jupyter notebooks (I am usure if you can use Copilot in the notebook). However, assuming that you can use, here is what I would watch out for:-
1. If the candidate is using Copilot to speed up mundane task but does the necessary heavy lifting where it is required. I would be Okay with it because it shows that the candidate wants to have control over items that are crucial for successful development, while automating the boring stuff.
2. If the candidate ends up using Copilot for everything then that's a candidate I would not proceed forward with because it shows that the candidate is relying heavily on a third party tool rather then owning the development process.
During our live coding rounds, we allow candidates to use google for referring documentation wherever needed. However, you might be surprised to know that quite a few of them don't know how to look for what they want to do using the documentation.