is simply nonsensical to speak of entities in "another" universe simulating "our" universe, as the word universe already means "everything that exists."

This seems a silly linguistic nitpick - e.g perhaps other people use "universe" to mean our particular set of three dimensions of space and one dimension of time, or perhaps other people use "universe" to mean everything which is causally connected forwards and backwards to our own existence, etc.

If the Simulation Argument used the word "local set of galaxies" instead of "universe", would you still call it incoherent? If changing a single word is enough to change an argument from coherent to incoherent, then frankly you didn't find a fundamental flaw, you found a linguistic nitpick.