I never bought into the theory, but I don’t think this is a good proof. I won’t pretend to understand the scientific details of their argument, but it breaks down if you assume that the creators live in a universe that does not follow the same physical laws as ours. Our universe may be simplified (possibly by necessity) and could be incapable of creating full recursive simulations of worlds as complex as our own, but that says nothing about the original universe that its based in.
Like any arguments about the existence of a higher being, it is impossible to prove that a higher being that doesn’t want to be found doesn’t exist. Just choose whichever theory you find to be more convenient, and live your life to the best of your ability.