he cannot increase rate of descent to get back on the PAPI visual 3 degree slope.
In most cases this would represent a very significant increase in the ROD (consider 3-400fpm while configuring on base versus 1000fpm stable criteria, for example) which in turn suggests a serious profile problem.
Circling is a visual maneuver so what prevented the PF from increasing their track mileage by flying through the extended centreline, at ATC's approval, keeping the runway in sight? N.B. This ignores the question of why the aircraft ended up so high in the first place, and ignores the fact that this is a simulator because that should not affect the decision to continue or otherwise.
That said:
A commercial operation provides safety margins which the passengers pay for. These margins are achieved through, in part, adherence to company SOPs. If they state you have to be fully stable at, say, 400ft for a circling approach and you instead choose to ignore the SOPs and point your passenger jet at an arbitrary point on the ground then you have made the decision to ignore the in-built safety margins based on a hunch that may or may not work out.
Inextinguishable fire: may be (but not necessarily) a different situation.
Normal ops: doesn't matter if you think it was "safe". You don't own the aircraft and must play by the rules which are in place for good reason.