Even if we can show that it is technically possible to model a universe like ours to the degree that our current perception of reality suggests exists, there are three other big factors that would need to be weighed:

Is it feasible? What Dyson sphere level of power would be needed to maintain such a simulation? Is that level of energy available to whomever is running the simulation?

Is there a positive ROI? What does this advanced civilization get out of running such an expensive simulation?

Is it moral? The simulation involves sentient creatures who are capable of deeply contemplating their own existence, capable of feeling rapturous pleasure and indescribable pain and loss, and ostensibly capable of making moral choices that range from heroic to depraved. Doesn't there come a point where the beings in a simulation are so close to the beings in "base reality" that the same moral principles apply? If you press a button that kicks off a simulation where humans can torture and murder each other, behaving essentially identically to humans in "base reality," aren't you in some sense facilitating those deaths?

> What Dyson sphere level of power would be needed to maintain such a simulation

Why would you assume energy is relevant to whoever turned on our simulation? If I created a simulation where the only source of energy was cotton candy, my creations might ask "but where would our creator even get enough cotton candy to run a simulation like this", not realize that it's absurd to think that the creator of a simulation has any of the same constraints that exist inside the simulation.

You basically described the plot of World on a Wire.

You run it to see if your military tactics will defeat the enemy and then you keep running it until you find a strategy that guarantees victory. Who cares if some sim lives are churned through the simulation, our lives are at stake!

Reductionist but I feel like that’s how it would go.