It does. That mechanical imitation is an representation of the real thing which can be used or accepted by the human mind as an subsitute of the real thing, effectively becoming the real thing in and of itself.
This only follows if acceptance by the mind is treated as the sole criterion of equivalence. A substitute can function as if it were the real thing without being the real thing. Painkillers can substitute for healing, pornography can substitute for intimacy, and dreams can substitute for lived experience while asleep, but none of these thereby collapse the distinction ontologically or normatively.
Judging solely based on output is the objective criterion for measuring the success of such objects. We say that calculators are inferior to human accountants, because they output more and at better quality than human accountants. An calculator doing forward automatic differentiation with dual numbers, is going to be much faster and output better deriatives than an accountant doing symbolic differentiation.
Calculators outperform humans at calculation because calculation is a narrow, instrumental task whose value is reducible to output accuracy and speed. Human relationships, flourishing, and moral agency are not instrumental tasks with a predefined output function. There is also a fundamental difference between mathematical calculation and simulating human emotions, and more than that, metaphysical concepts such as love, connection, integrity, and so on; I suppose the simulacrum can imitate the aforementioned concepts, but it would still fall back to the previous problem which is that it was programmed to do so, and lacks the metaphysical value of a human. It should also be obvious that efficiency matters only where the goal is instrumental. Human intimacy is not.
Sure, but despite dreams not obeying constant physical laws, most people cannot tell that they are dreaming unless explictly preparing for it. They believe the dream as if it was material reality, and they believe that incongruence and impossiblity. i.e, they take their dreams as empirical evidence or representation of reality. This is only stopped by the moment of waking up, where the incongruence presents itself an possiblity of differentiating between dream and reality. This also works on life, as life could be a dream, and insofar as a dream is not as simliar to said life. If there was no point of waking up, then people wouldn't be able to distinguish dream with reality, and they would happily dream while their body rots away in the material world.
As far as I can tell, this only serves to strengthen my point rather than undermine it; the fact that dreams are convincing until waking shows that immersion does not equal reality, since waking provides the corrective precisely because reality is governed by stable, external constraints that dreams lack.
If life were a dream with no waking point, then the distinction would indeed collapse, but that is the radical skepticism which I previously rejected, which offers no actionable guidance and undermines all pragmatic reasoning, including your own argument. If we accept that position, then no preference for simulacra over humans can be justified either, because all distinctions dissolve. Pragmatism requires stable reference points. Reality earns its value through consistency, consequence, and irreversibility; these are properties that dreams clearly lack.
Ontologically, there is no transcendtal quality with being human. We are no different than animals. We operate and think in the same way but at an different or higher level. I personally believe that human beings are different, as that we have free will and souls, but so do other animals and creatures. This is why we are able to compare ourselves to other species or abstract away our position to representations of other imagined inteligent species like aliens.
If free will and souls exist, then there is a metaphysical distinction, even if shared with other creatures. Moreover, moral frameworks do not require humans to be unique among all beings; they require agents to be more than output-generating systems. Once you admit souls or other metaphysical concepts such as moral responsibility, you have already conceded the main point which is that humans are not reducible to functional representations.