https://thomasokken.com/free42/#ios-paste
I'm selecting text from within a text editor (I've tried both TextEdit and Sublime Text) on my Mac and pasting into Plus42 on the phone. I tried pasting into Chrome as you suggested - it worked without issue i.e. the dialog box came up and persisted until I had made my selection.
Interestingly, I looked into the Free42 settings and I did not see the preference for what to do when pasting (I don't think I've actually run Free42 since installing the last update). I tried pasting into Free42 and it had the same behavior as Plus42 (which is consistent with earlier observations). After doing my first paste into the newly installed Free42 version I went back into its preferences and then I did see a new preference setting for paste options similar to that in Plus42. Not sure if that's a useful clue or not.