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It looks like your return statement is outside of the generate_launch_description() function. Do you still get an error if you indent it over to be in line with proc_env?

In other words, something like this:

import os  
from launch import LaunchDescription  
import launch_ros.actions  

def generate_launch_description():
    proc_env = os.environ.copy()
    proc_env['PYTHONUNBUFFERED'] = '1'

    return LaunchDescription([launch_ros.actions.Node(
            package='key_teleop', node_executable='key_teleop',
            env=proc_env)])