Meanwhile, one level up:
"Hey, look! Our planetary simulation has developed it's own planetary simulation."
"Cool! Lets set up a pool how many recursive simulations there will be in 100 years."
😉
Yes. I think so.
It just takes an exponential amount of energy and/or time. At some point it will stop due to energy limitations. Or will be stopped because computation time approaches infinity, even if all energy in the universe is available.
Also, now I think about the movie "The Thirteenth Floor".