Uhm...if we are a simulation then we have no clue how physics works in the real world that the computer or simulator is running in right? Does the physics of a video game have to match real life physics??
That higher order simulation would be different than humanity’s concept of a simulation, one might call it creation. I think what this proof says is no matter how powerful and knowledgeable we become we are not able to re-create ourselves.
This mirrors wisdom given to us thousands of years ago in the Old Testament.