FWIW, I know an Ione who is sometimes known as Io and I don't think she's had much trouble with anyone thinking it's Lo or 10. Unless the baby's going to be hanging out with ee cummings and bell hooks, most people will probably figure out from context that it's a personal name / proper noun and therefore most likely starts with a capital I rather than a lower-case L or a number 1. She might get Eeyore or EIEIO, especially if they're using the Greek pronunciation, but bullies will find something to tease about no matter what.
BUT - a two-letter legal name (that is, not a shortening or diminutive of a longer name) can cause a technical issue in some cases. Most legacy mainframe systems, as used by registry offices, banks, schools, etc., can now handle it. But it still seems to be the default for a lot of online forms to present an error if a first or last name is fewer than three bytes. It can be quite annoying if you're trying to charge something on a credit card registered to "Io Marie Smith" and the form refuses to allow First Name = Io, and then rejects the entry because the fist names don't match. This is becoming less common as people get more used to traditional two-letter names (e.g., in Asian languages, Hebrew, and even Irish) and more people are using trad diminutives as first names (Bo, Jo, Di, Ty, etc.) but definitely still happens. Just something to think about.