I will answer your question and ramble on about 6 other things you didn't ask:
All of my current test toons started at level 1 with zero interaction with any other server (i.e, not copied). I wanted a large number of gold characters to test/create rgmercs configs without dropping hundreds and hundreds of dollars to do it.
Eventually I moved some gear/items/plat over via mules/etc from another server, but it was all attunable stuff/spell gems/etc.
Playing on live/test simultaneously:
Hopping back and forth isn't really feasible, a mistaken testcopy from the live server character could cause you to lose a ton of work on test. The best bet is to never log back into the live toon once you've made the decision to copy and live on test. You can delete them, even, but it may be risky to reuse the name (I have read a single first-hand account of someone doing that and it overwriting the test character regardless... doesn't make much sense to me, but just sharing it.)
For gear/gearing/economy:
Some people load up and twink level 1 toons on FV and transfer to test, not personally my thing. The bazaar, when it is stocked (it is less so nowadays due to population), has just about anything for 1pp, up-to and including chase gear. Mats are freely copied from live servers, so raising tradeskills/etc is a breeze. Asking nicely in general chat will get you plat, bags, mounts, spells, armor, and anything else, although, you may have to ask when certain people are around (if at first you don't get an answer, try again later).
As far as grouping/raiding:
There are raid guilds, but the ones that are public don't really seem to be particularly cutting edge (they do, however, seem to be some really cool folks). There have been mq-friendly raiders and groupers out there, but there are also people who actively hunt down stupid mq'ers when they are bored. I would imagine this is the same as any other server.
Free gold status:
The account advantage of test is that you are considered to be a gold subscription (I say considered because you don't get things like the free heroic on test, you can't game the system that way). Prestige gear without paying, full AA, augs, etc. You still have to purchase expansions.
Low MQ uptime:
However, you need to be aware that test server MQ uptime is low over the last few years. I'd estimate 50-60% (compared to the 90-95% of live). I would check out the Test MQ build thread for more information on why that is. For people that must play eq with mq every day, that may be a dealbreaker.
I have heard that after years of the subscription / Krono grind on Live some folks like to retire into the sunset and play on Test after doing a copy.
That got me thinking. If you copied a toon to Test (for arguments sake let’s say it is level 100) and you play for a while and gained some levels (let’s say it is now level 110), if you decide to go back to Live you would have to “re-grind” those levels before another copy or else lose the progress you had made on Test.
For discussion, I was wondering if folks have ever started from Level 1 on Test? If so, what were your thoughts or reasoning? I have often viewed Test as an experimental sand box, but if memory serves me, I believe there were discussions several years ago about some folks playing exclusively on Test or perhaps doing a combination of FV and Test.
Too much morning coffee still in effect. Be well. Happy gaming.