Let's mess around with this a little more. One of my past jobs was being an Oracle DBA. Oracle SQL interactions, especially select statements and so forth, are made at a very low level (sometimes in kernel mode). When you issue a select statement that takes a while to come back your application (terminal, UEStudio, etc.) is locked up in a high-interrupt state and cannot be interrupted except by killing the process or some other scenario with a higher interrupt. In that case any resources your application (UEStudio) has locked will remain locked until your process releases them or the process is killed. You are doing a Ctrl-C to interrupt your Oracle session in the UES Console, but Windows may also be capturing that keystroke and trying to copy something to the clipboard. Now...since UES is probably using threads to do stuff it can still use the clipboard because it "owns" it at the time. However, when you move from UES to another application it cannot use the clipboard because UES still has it locked and has not released it.
When not in the middle of a SQL statement, are you able to Ctrl-C in the UES Console and still switch to another application and use the clipboard? If so, then the combination of the UES Console being in the middle of a high-interrupt operation may lock the clipboard for everyone but UES itself. If that is the case, then there may not be much that can be done because of the nature of Oracle interfacing.
Are you able to use another Telnet program terminal, issue the same long select statement, and then Ctrl-C out of the middle of the long SQL statement? That is, if you reproduce the same exact situation in another Telnet terminal program, is it able to cancel and come back? I know that you said that but I just want to confirm that another Telnet program can actually cancel out of the middle of the long SQL select statement. If so, then there may be some difference in the guts of how UES Telnet console and other programs interface with the server. It has been my experience, however, that this kind of scenario happens a lot when interfacing with Oracle and trying to cancel out of the middle of a long statement.