In a medium mixing bowl, combine the chicken strips with buttermilk, lime juice, garlic powder, 1/2 tsp salt, and 1/4 tsp black pepper. Toss to coat evenly. Cover the bowl and refrigerate for at least 15 minutes, or up to 30 minutes.

Set up three shallow dishes or bowls. In the first dish, add the all-purpose flour. In the second dish, lightly beat the two eggs. In the third dish, combine the panko breadcrumbs, shredded unsweetened coconut, paprika, cayenne pepper (if using), and 1/2 tsp salt. Mix well to combine.

Working with one piece of chicken at a time, remove it from the marinade, allowing excess liquid to drip off. First, dredge the chicken in the flour, shaking off any excess. Next, dip it into the beaten eggs, ensuring it's fully coated. Finally, transfer the chicken to the coconut-panko mixture, pressing firmly to ensure the breading adheres well on all sides. Place the coated chicken on a clean plate or baking sheet as you go.

Preheat your air fryer to 375°F (190°C). Lightly spray the air fryer basket with cooking oil. Arrange the coated chicken pieces in a single layer in the air fryer basket, ensuring not to overcrowd. You will likely need to cook in batches. Air fry for 12-16 minutes, flipping halfway through, until golden brown and cooked through. An internal temperature of 165°F (74°C) should be reached.

If baking, preheat your oven to 400°F (200°C). Place a wire rack on a baking sheet and lightly spray with cooking oil. Arrange the coated chicken pieces in a single layer on the wire rack. Bake for 20-25 minutes, flipping halfway through, until golden brown and cooked through (internal temperature 165°F/74°C).

Once cooked, remove the crispy coconut chicken from the air fryer or oven. Garnish with fresh cilantro if desired. Serve immediately with sweet chili sauce for dipping.