[proofplan]
The proof is microlocal and takes place after shrinking the conic neighbourhoods so that the canonical relation is a single elliptic canonical graph. The implication from observed regularity to source regularity uses the elliptic Fourier integral parametrix: an inverse-graph operator $B$ makes $BA$ an elliptic pseudodifferential operator on $\Gamma_X$, and pseudodifferential elliptic regularity recovers $u$. The converse decomposes the source into the selected branch and its microlocal complement; the wave front mapping theorem controls the selected branch, while the branch-exclusion hypothesis prevents singularities from the complement from reaching $\Gamma_Y$. The same argument with Sobolev wave front sets gives the stated order-shifted Sobolev equivalence.
[/proofplan]
[step:Shrink the conic neighbourhoods and choose microlocal cutoffs]
Choose conic open neighbourhoods
\begin{align*}
\Gamma_X'\subset \Gamma_X
\end{align*}
of $q_X$ and
\begin{align*}
\Gamma_Y'\subset \Gamma_Y
\end{align*}
of $q_Y$ such that
\begin{align*}
\kappa(\Gamma_X')=\Gamma_Y',
\end{align*}
the graph identity
\begin{align*}
C\cap(\Gamma_Y'\times \Gamma_X')=\operatorname{graph}(\kappa|_{\Gamma_X'})
\end{align*}
holds, the principal symbol of $A$ is elliptic on this graph, and
\begin{align*}
C\cap\bigl(\Gamma_Y'\times (T^*X\setminus 0)\bigr)
=
C\cap(\Gamma_Y'\times \Gamma_X').
\end{align*}
Since microlocal regularity in $\Gamma_X$ and $\Gamma_Y$ is local in the conic topology, it is enough to prove the equivalence on such smaller neighbourhoods and then cover the original neighbourhoods by them.
Let $P_X\in \Psi^0_{\mathrm{prop}}(X)$ be a properly supported pseudodifferential cutoff whose principal symbol is equal to $1$ on a conic neighbourhood of $\overline{\Gamma_X'}$ and whose microsupport is contained in $\Gamma_X$. Let $P_Y\in \Psi^0_{\mathrm{prop}}(Y)$ be a properly supported pseudodifferential cutoff whose principal symbol is equal to $1$ on a conic neighbourhood of $\overline{\Gamma_Y'}$ and whose microsupport is contained in $\Gamma_Y$. These cutoffs localize the source and target to the single elliptic branch.
[/step]
[step:Construct an inverse-graph parametrix for the elliptic branch]
By the [microlocal parametrix theorem for elliptic Fourier integral operators](/theorems/8211) associated to canonical graphs, applied to the [elliptic operator](/page/Elliptic%20Operator) $A$ on the graph of
\begin{align*}
\kappa:\Gamma_X'\to \Gamma_Y',
\end{align*}
there exists a properly supported Fourier integral operator
\begin{align*}
B:\mathcal{D}'(Y)\to \mathcal{D}'(X)
\end{align*}
associated with the inverse canonical graph
\begin{align*}
\operatorname{graph}(\kappa^{-1})\subset \Gamma_X'\times \Gamma_Y'
\end{align*}
such that $BA$ is microlocally equal on $\Gamma_X'$ to a properly supported pseudodifferential operator
\begin{align*}
E\in \Psi^0_{\mathrm{prop}}(X)
\end{align*}
whose principal symbol is elliptic on $\Gamma_X'$. This uses the [clean composition theorem for properly supported Fourier integral operators](/theorems/8209), because the graph of $\kappa^{-1}$ and the graph of $\kappa$ compose transversally and cleanly to the diagonal canonical relation over $\Gamma_X'$.
Thus there exists a smoothing remainder
\begin{align*}
R:\mathcal{D}'(X)\to C^\infty(X)
\end{align*}
microlocally near $\Gamma_X'$ such that
\begin{align*}
BAu=Eu+Ru
\end{align*}
microlocally in $\Gamma_X'$ for every $u\in\mathcal{D}'(X)$.
[guided]
The goal of this step is to turn the Fourier integral operator into something elliptic on the original source cotangent variables. The hypothesis that $C$ is a graph is exactly what makes this possible: near the chosen branch, each source covector in $\Gamma_X'$ corresponds to exactly one observed covector in $\Gamma_Y'$ through the canonical diffeomorphism
\begin{align*}
\kappa:\Gamma_X'\to \Gamma_Y'.
\end{align*}
Since the principal symbol of $A$ is elliptic on $\operatorname{graph}(\kappa)$, the microlocal parametrix theorem for elliptic Fourier integral operators gives a properly supported Fourier integral operator
\begin{align*}
B:\mathcal{D}'(Y)\to \mathcal{D}'(X)
\end{align*}
whose canonical relation is the inverse graph
\begin{align*}
\operatorname{graph}(\kappa^{-1})\subset \Gamma_X'\times \Gamma_Y'.
\end{align*}
The role of $B$ is to pull observed singularities back from $Y$ to $X$ along the inverse canonical transformation.
We now compose $B$ with $A$. The canonical relation of $A$ is the graph of $\kappa$, while the canonical relation of $B$ is the graph of $\kappa^{-1}$. Their composition is the diagonal relation over $\Gamma_X'$, because
\begin{align*}
\kappa^{-1}(\kappa(q))=q
\end{align*}
for every $q\in\Gamma_X'$. The clean composition theorem for properly supported Fourier integral operators therefore identifies $BA$ microlocally near $\Gamma_X'$ with a properly supported pseudodifferential operator
\begin{align*}
E\in \Psi^0_{\mathrm{prop}}(X).
\end{align*}
Ellipticity of the principal symbol of $A$ and the reciprocal principal symbol used in the construction of $B$ imply that the principal symbol of $E$ is elliptic on $\Gamma_X'$.
Consequently, for every $u\in\mathcal{D}'(X)$, there is a remainder
\begin{align*}
R:\mathcal{D}'(X)\to C^\infty(X)
\end{align*}
which is smoothing microlocally near $\Gamma_X'$ and satisfies
\begin{align*}
BAu=Eu+Ru
\end{align*}
microlocally in $\Gamma_X'$. This is the precise point at which the elliptic FIO is replaced by an elliptic pseudodifferential operator, so that pseudodifferential elliptic regularity can be used in the next step.
[/guided]
[/step]
[step:Recover source microlocal smoothness from observed microlocal smoothness]
Assume first that
\begin{align*}
\operatorname{WF}(Au)\cap \Gamma_Y=\varnothing.
\end{align*}
Since the canonical relation of $B$ is contained in $\Gamma_X'\times \Gamma_Y'$, the [wave front mapping theorem for Fourier integral operators](/theorems/8206) gives
\begin{align*}
\operatorname{WF}(B Au)\cap \Gamma_X'=\varnothing.
\end{align*}
The remainder $Ru$ is smooth microlocally in $\Gamma_X'$, hence
\begin{align*}
\operatorname{WF}(Eu)\cap \Gamma_X'=\varnothing.
\end{align*}
Because $E$ is elliptic on $\Gamma_X'$, [microlocal elliptic regularity for pseudodifferential operators](/theorems/8163) gives
\begin{align*}
\operatorname{WF}(u)\cap \Gamma_X'=\varnothing.
\end{align*}
Covering $\Gamma_X$ by such neighbourhoods proves
\begin{align*}
\operatorname{WF}(Au)\cap \Gamma_Y=\varnothing
\implies
\operatorname{WF}(u)\cap \Gamma_X=\varnothing.
\end{align*}
Here the elliptic regularity input is [Microlocal Elliptic Regularity Theorem]([citetheorem:8175]), applied to the elliptic pseudodifferential operator $E$.
[/step]
[step:Propagate regularity from the selected source branch to the observed branch]
Assume conversely that
\begin{align*}
\operatorname{WF}(u)\cap \Gamma_X=\varnothing.
\end{align*}
Using the source cutoff $P_X$, decompose
\begin{align*}
u=P_Xu+(I-P_X)u
\end{align*}
microlocally near all source covectors that can reach $\Gamma_Y'$, where $I$ denotes the identity operator on $\mathcal{D}'(X)$.
For the selected branch, $P_Xu$ is smooth microlocally in $\Gamma_X'$ by the assumption and by the [pseudodifferential characterization of the wave front set](/theorems/8174). The wave front mapping theorem for Fourier integral operators, applied to $A P_X$, gives
\begin{align*}
\operatorname{WF}(A P_Xu)\cap \Gamma_Y'=\varnothing.
\end{align*}
For the complementary branch, the microsupport of $I-P_X$ is disjoint from $\Gamma_X'$ near every source covector paired by $C$ with a covector in $\Gamma_Y'$. The branch-exclusion hypothesis states precisely that
\begin{align*}
C\cap\bigl(\Gamma_Y'\times (T^*X\setminus 0)\bigr)
=
C\cap(\Gamma_Y'\times \Gamma_X').
\end{align*}
Therefore no element of $\operatorname{WF}((I-P_X)u)$ can be carried by $C$ into $\Gamma_Y'$. Applying the wave front mapping theorem again yields
\begin{align*}
\operatorname{WF}(A(I-P_X)u)\cap \Gamma_Y'=\varnothing.
\end{align*}
Since
\begin{align*}
Au=A P_Xu+A(I-P_X)u
\end{align*}
microlocally near $\Gamma_Y'$, the union property of wave front sets gives
\begin{align*}
\operatorname{WF}(Au)\cap \Gamma_Y'=\varnothing.
\end{align*}
Covering $\Gamma_Y$ by such neighbourhoods proves
\begin{align*}
\operatorname{WF}(u)\cap \Gamma_X=\varnothing
\implies
\operatorname{WF}(Au)\cap \Gamma_Y=\varnothing.
\end{align*}
The mapping theorem used here is [Wave Front Mapping Theorem for Fourier Integral Operators]([citetheorem:8206]).
[/step]
[step:Repeat the argument with Sobolev wave front sets and track the order shift]
Let $s\in\mathbb{R}$. The Sobolev version follows by replacing $\operatorname{WF}$ throughout by $WF^s$ on $X$ and by $WF^{s-m}$ on $Y$, using the convention that an order-$m$ Fourier integral operator associated to a canonical graph maps microlocal $H^s$ regularity on the source to microlocal $H^{s-m}$ regularity on the target.
For the forward implication, if
\begin{align*}
WF^{s-m}(Au)\cap \Gamma_Y=\varnothing,
\end{align*}
then the inverse operator $B$, whose order is the inverse order prescribed by the parametrix construction, gives $BAu$ microlocally in $H^s$ on $\Gamma_X'$. Since $BAu=Eu+Ru$ microlocally on $\Gamma_X'$, with $R$ smoothing and $E$ elliptic pseudodifferential of order $0$, [microlocal Sobolev elliptic regularity](/theorems/8179) gives
\begin{align*}
WF^s(u)\cap \Gamma_X'=\varnothing.
\end{align*}
This uses [Microlocal Sobolev Elliptic Regularity]([citetheorem:8179]).
For the converse, if
\begin{align*}
WF^s(u)\cap \Gamma_X=\varnothing,
\end{align*}
then $P_Xu$ is microlocally $H^s$ in $\Gamma_X'$, so the Sobolev mapping property for order-$m$ Fourier integral operators gives $A P_Xu$ microlocally in $H^{s-m}$ in $\Gamma_Y'$. The complementary term $A(I-P_X)u$ is microlocally smooth in $\Gamma_Y'$ by the same branch-exclusion argument as above, and hence is also microlocally $H^{s-m}$ there. Therefore
\begin{align*}
WF^{s-m}(Au)\cap \Gamma_Y'=\varnothing.
\end{align*}
Covering the original conic neighbourhoods gives
\begin{align*}
WF^{s-m}(Au)\cap \Gamma_Y=\varnothing
\quad\Longleftrightarrow\quad
WF^s(u)\cap \Gamma_X=\varnothing.
\end{align*}
Together with the smooth case proved above, this completes the proof.
[/step]