I'm not convinced of what you wrote. Is it actually true that cases like that are dismissed? Or is it that the infringing party is ordered to stop, but not damages are awarded to the rightsholder? You've offered no examples of dismissal to back up your statement.
I absolutely agree with you that copyright is not a boolean, but I don't buy the idea that a judge will just shrug and allow infringement to continue just because there was no commercial harm.
I also think your example is just irrelevant to the case at hand. Sure, someone "performing" someone else's copyrighted words once may not be a big thing. But if Copilot is actually found to be infringing, these infringements will keep happening, over and over and over.
Bottom line is that none of this has been tested in court. I think it's great that someone is working on doing just that. Maybe the end result will be that Microsoft's use is indeed fair use, and that Copilot users have no further obligations. But I'd like to hear a court decide that, not a bunch of armchair non-lawyers (myself included) on a random web forum.