The limits to how many nodes can exist is Zeno's dichotomy paradox however you already granted that with your assumption: "This tree must end." However your ultimate question is concerning our specific reality. Argument granting that "Simulation theory is correct:"
First, the caveat here is that simulation theory is only useful in science fiction and has never itself been considered in actual philosophical discourse; because actual discourse must respect the current state of knowledge. In considering universes, much of that knowledge comes from cosmology and physics.
The question specifically asks if no simulations can be derived from the one we allegedly exist in. If we are, as the theory argues, a leaf reality.
Answering this requires some more rigid definitions or ambiguity will derail the process.
Let's start with what we know today:
Time is not as important as we once thought. All science today using both General Relativity and quantum mechanics leads us to the conclusion that space and time are fundamentally one thing, they are inseparable, where warping space necessarily warps time and vice-versa. Einstein's field equations clearly show that time was created with the universe. Saying "what happened before the Big Bang" is like asking what you were doing during the Holy Crusades. For some people that's hard to get around, but the math works that way so I accept it, and it really isn't so hard to understand for anyone who plays F.E.A.R. and battles the Replicas. While you may wonder why your opponents are so smart, the real question is, "How can I be faster than them?" The answer is called "reflex time" by the game designers. Even though Replicas are very smart and powerful, time itself is controlled at the whim of the programmer, who exists outside that simulated universe. At some point, the world F.E.A.R. takes place in was created. But no matter how smart a Replica becomes inside that world, even looking at trees that seem to be decades old, they will never understand that their universe was created in 2007 in a timeline above their own. Here is an illustration of the problem of time:
To the simulated person the tree is 15 years old. But that tree didn't exist 15 years ago - in our time. The simulation has no way of calculating our time, and we can pause the game, go get lunch, and start it up again without them ever knowing time was stopped in their world.
Nick Bostrom's problem with causality:
Bostrom argues that computer power may advance to a point where the simulated world equals or exceeds the "real" world (or the simulation above it). This cannot happen in any causality, at any node of the alleged simulation. In all cases, a cause must be BEFORE any effect it causes. This means the delay between a cause and an effect can never reach zero. No matter how sophisticated a computer becomes, it will never make an eye blink, for example, with zero delay between the time the program decids to blink, and the time the eye actually blinks. Some delay will always exist.
This means we can never be replaced by our creation inside some simulation, because the cause of every action within the simulated time (which we created), will always happen in OUR time (real time), and will always be before the action we cause.
Is it impossble to create another simulation after a leaf reality?
Absolutely. What the programmers of F.E.A.R. call reflex time proves that any simulation can be as fast or as slow as the parent reality decides it to be, so long as it obeys causality and has SOME positive value of time. In other words, we could theoretically play F.E.A.R. on an ancient 1mHz computer and the simulation would work exactly the same. It would be extremely slow and boring for us, but within the simulated world everything would move "normally" as they expect it to. A bullet might take 2 weeks to reach the wall in our time, but it is still too fast to dodge in their reality. Because they are all thinking at 1mHz!
We can extrapolate this further and allow the simulated persons inside F.E.A.R. to develop their own computer and create a reality. They will use what they think is a "obscenely fast" processor - 3 Hz - and create their own simulated people. In OUR time (2 nodes above them), an eye blink may take 10 years to us, but that doesn't matter.
This can go on indefinitely. There is no reason that computers need to advance or reach "hi fidelity" before simulation begins. The processes which govern causal actions are time-independent - meaning that they only need to have a cause before an effect, but the amount of time between cause and effect is not governed in any way, it simply cannot be zero or outside the causal light cone.
In summary, given the definitions provided for the simulation hypothesis and our current state of knowledge of reality, there can be any arbitrarily large number of layers of realities created by any simulated reality; and each layer of reality is created with its own space-time dimensions that do not need to be "fast" by any measure in relation to the parent reality. General relativity prohibits the existence of "leaf realities" and refutes that reality spawning can have any dimensional limits at all. The anthropic principle does not refute that child realities may be created; it states that consciences outside that reality (us) cannot be supported inside that created reality - only created consiences inside are compatible (I.e., TRON demonstrates a violation of the Anthropic principle).