jacob_cannell comments on Anthropomorphic AI and Sandboxed Virtual Universes - Less Wrong
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A paraphrase from Greg Egan's "Crystal Nights" might be appropriate here: "I am going to need some workers - I can't do it all alone, someone has to carry the load."
Yes, if you could create a universe you could inflict our problems on other people. However, recursive solutions (in order to be solutions rather than infinite loops) still need to make progress on the problem.
Yes, and I discussed how you could alter some aspects of reality to make AI itself more difficult in the simulated universe. This would effectively push back the date of AI simulation in the simulated universe and avoid wasting computational resources on pointless simulated recursion.
And as mentioned, attempting to simulate an entire alternate earth is only one possibility. There are numerous science fiction created world routes you could take which could constrain and focus the sims to particular research topics or endeavors.