I have a theory on mind that dovetails yours, and I hope you will like it. It has something to do with the way old things become new things, thus also with how old ideas become new ideas.
It is one thing to be able to simulate situations, but it is another one to predict them, and that's what our brain is able to do. Theoretically though, we cannot predict new things out of old ones, but we can certainly have the feeling that we can. We have the feeling we can win the lottery for instance, and this feeling is so strong that we buy tickets even if we know we almost have no chance to win. I also have the feeling that my theory is right even if it is completely speculative. Do we have a brain function that forces us to speculate, a neurotransmitter that rewards us when we take chances? And even if it was so, how could we use our memory to speculate since its duty is to remember things, not to change them?
I found a convincing answer to that in Darwin's theory. That theory shows that things can face changes in their environment if random changes happen to them when they reproduce themselves, and memory is a kind of reproduction. So I figured that our ideas could change if random mutations were happening to them, or if random crossings were happening inside them the same way randomness at the DNA scale helps species to evolve at their own scale. Other animals do not speculate, and it might be because their mind is not able to produce randomness, or at least, not the way ours do. Do we have a random function that alters our memories randomly or is randomness part of the way memory works?
If it is a function, then it has to be located at a place where all the information goes through, so it might be part of the hippocampus' duty when it simulates situations. If it is the way memory works, then it might be due to our neurons' imprecision, which may be similar to people's indecision when they vote for instance. Sometimes we feel we can take risks and we vote for change, and sometimes we feel insecure and we vote for security. If more people feel secure, then the government changes, but nobody can predict future, so no government can either. What happens is that we socially take a decision without knowing it will work, and I think it is also what our mind does, so it has to stay concentered on what it does in case it wouldn't work, and it is that concentration that we would call consciousness. It is change that we would get conscious of, and when no change happens outside of the brain, we could get conscious of the change happening into it.
When we drive for instance, we are not conscious of the road until something that our mind cannot subconsciously handle happens, but we are still conscious of what we think, and we can even remember it. So this way, you're right, what we are conscious of is a simulation: we simulate the response to a change, and we can also simulate a response to our own internal random changes. It doesn't matter if we take a risk while thinking, but it might be dangerous to do so while driving, or even while trying a new way to fly for instance, but it is so rewarding when it works that I think evolution has developed a particular way to force our animal mind to take risks: imagination, which comes with the pleasure of imagining a better way, which is of course only a simulation. I have more to say on our subconscious behavior, but I will let you digest what I said on our conscious one before continuing.