The question I have is can I continue to use my hw.1 as a dedicated hardware wallet, as well as, have it function as a co-signer for the copay wallet?
Yes, you can do that if it was properly initialized with the "allow multisig without confirmation" flag - it might not be if you were one of our first users. In this case, you'd just need to reset the HW.1 by entering a wrong PIN 3 times, and restore it with the latest Chrome application. But you can test it with Copay first. If it works, you're good to go.