>Any method of emulating the black hole within a volume less-than or equal to the Schwarzchild radius of the black hole would collapse, but you could do the calculation over a larger volume and avoid that.

...This was my intuition as well, but I'm far from certain about it. It's not uncommon for the universe to find sneaky ways to prevent us from "cheating" so to speak. These often result from deep symmetries/conservation laws and fundamental limits on information.

I'm actually a big opponent of the simulation argument for that reason. I don't think you can accurately simulate the universe without having a universe to simulate it in. Otherwise, you could just 'turtles-all-the-way-down' the simulation. The information density would have to be unbounded, and this seems to be in disagreement with fundamental laws of the universe.

We don't have a theory of quantum gravity... it's definitely possible that to simulate the blackhole in a more spread out manner would be impossible. I could envision a fundamental tradeoff where to replicate the information exchanges between the microscopic constituents requires that either you satisfy the hoop conjecture, or you keep increasing the size of your model without bound, whereby for any finite size you still satisfy the hoop conjecture. (Particularly since the required mass/energy density goes down significantly as the radius increases.) I know that's wild speculation, but I feel like it's not quite crazy enough to take for granted.