[guided]The strategy is to assume $u \ge 0$, since the layer-cake representation in Step 3 requires non-negativity. To handle a general $u$, we decompose into positive and negative parts and prove the inequality for each separately.
Define
\begin{align*}
u^+: \mathbb{R}^n &\to [0, \infty), & x &\mapsto \max(u(x), 0), \\
u^-: \mathbb{R}^n &\to [0, \infty), & x &\mapsto \max(-u(x), 0).
\end{align*}
Then $u = u^+ - u^-$, $|u| = u^+ + u^-$, and $u^+ u^- = 0$ pointwise. Since $\operatorname{supp}(u)$ is compact and $u^\pm$ vanish where $u$ does, both $u^+$ and $u^-$ have compact support.
*BV regularity of $u^\pm$.* The map $\rho^+: t \mapsto \max(t, 0)$ is Lipschitz with Lipschitz constant $1$, and $\rho^-: t \mapsto \max(-t, 0)$ is Lipschitz with constant $1$ as well. By the BV chain rule for Lipschitz post-composition (a standard $BV$ chain rule), $u^\pm \in BV(\mathbb{R}^n)$. The decomposition of total variations follows because $\rho^+$ and $\rho^-$ act on disjoint regions: $\rho^+$ is locally constant on $\{u \le 0\}$ and equals $\operatorname{id}$ on $\{u > 0\}$, while $\rho^-$ is locally constant on $\{u \ge 0\}$ and equals $-\operatorname{id}$ on $\{u < 0\}$. Therefore $Du^+$ is supported in $\{u > 0\}$, $Du^-$ in $\{u < 0\}$, and the absolute total variations add:
\begin{align*}
|Du^+|(\mathbb{R}^n) + |Du^-|(\mathbb{R}^n) = |Du|(\mathbb{R}^n).
\end{align*}
*$L^{n/(n-1)}$ regularity.* Both $u^\pm \le |u|$ pointwise. Since $u$ has compact support, $|u| \in L^p$ for every $p$ provided $u \in BV$ has any $L^p$ membership, which is automatic for compactly supported BV functions. Hence $u^\pm \in L^{n/(n-1)}(\mathbb{R}^n)$. Because $u^+ u^- = 0$ pointwise, the supports of $u^+$ and $u^-$ are disjoint up to a null set, so
\begin{align*}
\|u\|_{L^{n/(n-1)}}^{n/(n-1)} = \int_{\mathbb{R}^n} |u|^{n/(n-1)} \, d\mathcal{L}^n = \int_{\mathbb{R}^n} (u^+)^{n/(n-1)} \, d\mathcal{L}^n + \int_{\mathbb{R}^n} (u^-)^{n/(n-1)} \, d\mathcal{L}^n.
\end{align*}
The elementary inequality $(a + b)^{1/q} \le a^{1/q} + b^{1/q}$ for $a, b \ge 0$ and $q \ge 1$, applied with $q = n/(n-1) \ge 1$ and $a = \|u^+\|^{n/(n-1)}$, $b = \|u^-\|^{n/(n-1)}$, gives
\begin{align*}
\|u\|_{L^{n/(n-1)}} \le \|u^+\|_{L^{n/(n-1)}} + \|u^-\|_{L^{n/(n-1)}}.
\end{align*}
If the non-negative case is established with $\|v\|_{L^{n/(n-1)}} \le C(n) |Dv|(\mathbb{R}^n)$ for compactly supported $v \ge 0$, then applying it to $v = u^+$ and $v = u^-$:
\begin{align*}
\|u\|_{L^{n/(n-1)}} \le C(n) (|Du^+|(\mathbb{R}^n) + |Du^-|(\mathbb{R}^n)) = C(n) |Du|(\mathbb{R}^n).
\end{align*}
This reduces the problem to the case $u \ge 0$, which we treat in the remaining steps.[/guided]