No it's not from Apple, and yes its legal.
CNet's Marguerite Reardon notes that this isn't the first time a third party developer has tried to add copy and paste to the iPhone. OpenClip showed potential but Apple's iPhone 2.1 software shut down the functionality.
Pastebud does its magic with two Safari bookmarks: one prepares and loads the page you are viewing, ready to select text at the touch of a finger. From there, you can copy any text you want and create a new mail message with that text in it. In addition you can also copy and paste in the text field of a different Web page.
Jed Schmidt, creator of Pastebud, says that they have been testing it for about a week and are now "putting the finishing touches on the web site before launch." A video on Gizmodo demonstrates it in action.
While this technique will probably work for a lot of people, I just want real copy and paste from Apple for Christmas. Please?