Your thought experiment is at first reassuring but flawed though as it’s based on a false assumption - that it needs to be a universe simulation, and thus as things get more and more complex as it progresses that it would become untenable.

Even if you were just to simulate the Earth alone, but in perfect detail (every atom, every electron, everything) and feed false information in a sphere of a fake universe around it, then how we progress and arrange material in our simulation wouldn’t necessarily make the simulation exponentially more and more complex. A perfect simulation of just the Earth might conceivably be done by a computer on an imaginable scale such as a solar system sized computer or even a planet sized computer. So while the concept that an increasingly complex simulation might need an increasingly complex computer to simulate, as we don’t even know the scope or scale of our potential simulation is. We also don’t even know the speed our simulation would be running at - a incredibly complex simulation could just run slower and slower as it gets more complex and we would have no clue because time is also simulated.

You’re absolutely right that a perfect simulation would be indistinguishable from a basis reality. But even more of a mind fuck, even if we were to crack the “base code” of the universe we still might not ever be able to determine if we’re in a simulation because we have no frame of reference on a what a non-simulated universe should look like.

My solution is just not to think about - as you say the question is irrelevant beyond being interesting and/or if you enjoy an existential crisis!