Is the Backup Copy Job rehydrating the inline deduped Backup Files (from the "primary" Backup Job)?
Not sure whether I'm following you on that. Backup copy job has its own compression and deduplication mechanisms that work independently from backup job settings.
Since you're decompressing data before storing it, don't expect high data reduction ratio provided by backup server.
How can I rehydrate Backup Job files before writing to tape.
The data gets archived to tapes as is. Meaning compressed and deduplicated backups will not be rehyrdated prior to landing to tapes. Do you plan to native tape hardware compression?
Also is there a way for me to write the backup files to tape in vmk/vmdk format so we so can restore the vm's straight from tape without Veeam somewhere down the line?
Potentially you can copy VM, using VM copy job, and write flat files to tapes via file to tape job. However, it doesn't sound like the best strategy. Because without VB&R you won't be able to restore from tapes. Neither will this scenario allow you to restore VM directly into infrastructure.
What I can suggest as alternative is Direct VM restore from tapes