(1) Person notices that computer simulations are getting increasingly powerful. Maybe we will be able to simulate something like the universe one day which will have life in it.
(2) If simulating the universe is so easy and inevitable, what are the odds that we are at the top level?
The idea in the article would refute the inductive step.
No it doesn't. The article describes a proof that it is impossible for a computer to simulate this physical universe with perfect accuracy; but, that's not actually a problem for Nick Bostrom's simulation argument. For the simulation argument to work, you don't need to simulate the universe with perfect accuracy – just with sufficient accuracy that your simulated people can't distinguish it from a real one. And this proof isn't about "ability to simulate a universe to the point the simulated people can't tell that it is a simulation", it is about "ability to simulate a universe with perfect accuracy". So the proof isn't actually relevant to that argument at all.