Your first stated belief was "the universe itself operates on mostly simple rules which can be simulated to high enough precision on hardware to approach what happens in the real world"

If a simulation takes resources that are exponential in the number of particles then it fails that test. All the stars will die before you manage to calculate anything meaningful in your non-microscopic simulated world.

There's a line between things that take massive resources and things that take nearly-infinite resources. Let's say the line is somewhere around the 'Dyson sphere' range.

The former can be computed on hardware. The latter cannot be computed on hardware.