Exponential slowdowns at each level ruin this hypothesis.
First of all, Bits != Q-bits. You can clone bits. You can't clone Q-bits: https://en.m.wikipedia.org/wiki/No-cloning_theorem
Second, photocopies are static. The physical world is not static.
The problem is that an exponential slowdown at each level requires discounting the probability of being in a simulation by an exponential amount per level. So instead of being able to say that the weighted odds of being in a simulation are higher than the odds of not being in a simulation, you have to say that, at best, there's a small chance of being in a simulation.