You wrote "as it requires significant energy and time from a conscious creator". How about asking why they would have done that?

You wrote " ethical dilemmas arise", but don't even attempt to examine them.

OK, I challenge the author and anyone serious here, why would the simulation be made? If you can answer that, you could use it as data to probe the simulation or reality. I know a very good reason to do it, that no one considers. No, I don't know if this is a simulation but in all the writings about it I never see a reason to make it offered, aside from curiosity and some people have offered the point that that would present deep moral problems for the creators. Yet no one speculates about their moral nature.

The largest problems with considering the question of is this a simulation is that people want to look at in technical terms. I mean, this article is very scholarly but is just an interpretation of a religious text, not an evaluation of the meaning. Looking at it in moral terms offers far more. Looking at it ... another way, offers much more.

You can assume (if you study morality) that an advanced (posthuman) species has a well developed moral tradition and practice... or they wouldn't have survived to become advanced. Find an answer to why an advanced civilization would want to make a simulation, that does not lead to moral violations. At least you will be asking an interesting question.