Even if it does violate copyright, I think there is a strong argument for adjusting copyright law to allow training ML algorithms with any data, no matter the source.

In cases like this, the benefits of the technology are so huge, and the downsides to the original code author so tiny. Was he actually going to license that code to someone who said 'nah, I'll recreate it with copilot instead'?

Very few people successfully license anything less than 100,000 lines of code anyway.