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A more suitable word would be that we "emulate" the bones, etc., rather than simulate, which to me implies that you are testing against a replica of a thing. But I don't really think emulate works here because they're not especially analogous; these are fundamentally different approaches to flight so any form following the function would be incidental at best.

That's fair.

I was thinking OP meant more simulate as in https://en.wikipedia.org/wiki/OpenWorm ie. a complete bottom-up simulation at the cellular level

By your definition of simulate, I think artificial neural networks are absolutely on their way to simulate intelligence

The type of propulsion is not, though. Nothing in nature has 360° rotatory motion. Airplane is not an exact simulation of a bird. Only an approximation

https://phys.org/news/2018-04-bacterial-propeller.html

yes, the wings flap. the airframes are made of bone.