> If we are all deceived then that claim is false, regardless of its utility.
Not really, knowledge is relative: Our claim of "The earth goes around the sun" claim is equally true, regardless of whether we are in a simulation or not. If we are in a simulation, there may not be a real earth, and real gravity may function differently than our gravity. Obviously this piece of knowledge is about our own earth and our own gravity.
If we are in a simulation, then the claims we make are about the simulation and are still provable. If one of use were removed from the simulation, they would be forced to potentially learn an entirely new set of rules and facts. Their knowledge about the our simulation wouldn't be false, but it would have to qualified as about a particular simulation rather than as about reality.
> The factory is made of steel (utility) its products are made of wood (truth), that utility features in the production mechanism does not mean it features in the product.
I don't understand this metaphor.
Truth and Utility are measures we use to evaluate beliefs or claims. In your metaphor, they would be the QA process in the factory. At best they are the QA process as the factory builds itself.
The Doctrine of Uniformity, the scientific method, mathematical proof, visual proof, trust in experts, holy texts, and really the entire sum of our existing knowledge are what make up the factory that produces our beliefs and claims.
> My observation about "the simulation hypothesis" is that it isnt a hypothesis at all.
It certainly is a hypothesis, but may not be a scientific (i.e. testable) hypothesis if there are no associated testable predictions.
I don't get people like you who seem to think there is some magical set of "true claims" that somehow exist outside of any knowledge structure. To me, claims can only be made within a knowledge structure and those claims can only have meaning (let alone truth) by being evaluated within that knowledge structure. I'd be curious to hear you explain how it could be anything else.
I personally think our sense of "truth" arose as an instinctive heuristic for estimating the utility of a claim given our limited existing knowledge and experience.