[proofplan]
We isolate the fragment of $T$ consisting of one Russell-style universe $\mathcal U$ with $\mathcal U : \mathcal U$ and dependent products closed in $\mathcal U$. In the first step we define $\lambda^\ast$ to be the one-sort pure type system with the axiom $*:*$ and product rule $(*,*,*)$, and we interpret it in $T$. The Girard-Hurkens paradox theorem for this pure type system gives a closed polymorphic contradiction term of type $\prod_{C:*} C$. We verify that the hypotheses of that paradox are exactly supplied by the stated rules of $T$, translate that closed term into $T$, and then apply it to the small empty type $\varnothing : \mathcal U$.
[/proofplan]
[step:Identify the type-in-type pure type system inside $T$]
Let $\lambda^\ast$ denote the pure type system with one sort $*$, one axiom
\begin{align*}
* : *,
\end{align*}
and one product rule
\begin{align*}
(*,*,*),
\end{align*}
meaning that if $A$ is a type at sort $*$ and $B$ is a type at sort $*$ in context extended by $x:A$, then $\prod_{x:A}B(x)$ is again a type at sort $*$.
We interpret this system in $T$ by sending the unique sort $*$ to the universe $\mathcal U$, sending variables to variables, sending dependent products in $\lambda^\ast$ to dependent products in $T$, and sending lambda abstraction and application to the corresponding dependent product introduction and elimination operations in $T$. This interpretation is well defined because $T$ has the ordinary structural rules, substitution, dependent product formation, dependent product introduction, dependent product elimination, and judgmental beta-conversion. The axiom $* : *$ is interpreted as the assumed judgment
\begin{align*}
\vdash \mathcal U : \mathcal U.
\end{align*}
The product rule $(*,*,*)$ is interpreted as the assumed closure of $\mathcal U$ under dependent products.
[guided]
The point of this step is to make precise which part of $T$ is responsible for the contradiction. We define the source system $\lambda^\ast$ to have exactly one universe-like sort $*$, with the self-typing axiom
\begin{align*}
* : *,
\end{align*}
and with dependent products allowed from $*$-small domains and $*$-small codomains back into $*$.
We now define an interpretation of $\lambda^\ast$ in $T$. The sort $*$ is interpreted as the term $\mathcal U$. A context
\begin{align*}
x_1:A_1,\dots,x_n:A_n
\end{align*}
of $\lambda^\ast$ is interpreted as the corresponding context in $T$, with every type expression translated recursively. Variables are interpreted by the same variables. A product expression
\begin{align*}
\prod_{x:A}B(x)
\end{align*}
is interpreted as the dependent product in $T$ formed from the translations of $A$ and $B(x)$. A lambda abstraction is interpreted by the dependent product introduction rule of $T$, and an application is interpreted by the dependent product elimination rule of $T$.
We must check that each rule of $\lambda^\ast$ is respected. The axiom $*:*$ is respected because the theorem assumes
\begin{align*}
\vdash \mathcal U : \mathcal U.
\end{align*}
The product rule is respected because the theorem assumes that, whenever
\begin{align*}
\Gamma \vdash A : \mathcal U
\end{align*}
and
\begin{align*}
\Gamma,x:A \vdash B(x) : \mathcal U,
\end{align*}
one can derive
\begin{align*}
\Gamma \vdash \prod_{x:A}B(x) : \mathcal U.
\end{align*}
The term-forming rules are respected because the statement includes the usual dependent product introduction and elimination rules. Substitution and beta-conversion are respected because these are included among the structural and judgmental equality rules of $T$. Thus every derivation in $\lambda^\ast$ translates into a derivation in $T$.
[/guided]
[/step]
[step:Invoke the Girard-Hurkens paradox for the interpreted fragment]
We use the Girard-Hurkens paradox theorem in its one-sort pure type system form: in the pure type system $\lambda^\ast$ with $*:*$ and the product rule $(*,*,*)$, there is a closed term
\begin{align*}
\Omega : \prod_{C:*} C.
\end{align*}
This is the precise external result used in the proof: its conclusion is the closed polymorphic contradiction term displayed above, not merely an abstract statement that the system is inconsistent.
The previous step verifies the hypotheses needed to interpret every $\lambda^\ast$ derivation in $T$: the sort axiom is interpreted by $\vdash \mathcal U : \mathcal U$, the product rule is interpreted by closure of $\mathcal U$ under dependent products, and the term rules are interpreted by the dependent product introduction, elimination, substitution, conversion, and beta-conversion rules of $T$. Therefore the closed derivation of $\Omega$ translates to a closed term
\begin{align*}
\omega : \prod_{C:\mathcal U} C.
\end{align*}
[guided]
The decisive external input is not that every closed type of $T$ is automatically inhabited. The precise Girard-Hurkens conclusion used here is stronger and more structured inside the type-in-type fragment itself: the one-sort pure type system $\lambda^\ast$, with axiom $*:*$ and product rule $(*,*,*)$, derives a closed polymorphic term
\begin{align*}
\Omega : \prod_{C:*} C.
\end{align*}
This is the exact paradox theorem being invoked. It says that, from the self-typing sort $*:*$ and impredicative dependent products over that same sort, the paradox constructs a function sending each small type $C$ to an element of $C$.
We now check that this theorem applies to the interpreted fragment of $T$. The source sort $*$ is interpreted as $\mathcal U$, and the axiom $*:*$ is interpreted by the stated judgment
\begin{align*}
\vdash \mathcal U : \mathcal U.
\end{align*}
The source product rule $(*,*,*)$ is interpreted by the stated closure rule for $\mathcal U$: if
\begin{align*}
\Gamma \vdash A : \mathcal U
\end{align*}
and
\begin{align*}
\Gamma,x:A \vdash B(x) : \mathcal U,
\end{align*}
then
\begin{align*}
\Gamma \vdash \prod_{x:A}B(x) : \mathcal U.
\end{align*}
The lambda abstraction, application, substitution, conversion, and beta-conversion steps occurring in the Girard-Hurkens derivation are interpreted by the corresponding rules assumed for $T$. Hence the closed term $\Omega$ translates to a closed term
\begin{align*}
\omega : \prod_{C:\mathcal U} C
\end{align*}
in $T$.
[/guided]
[/step]
[step:Instantiate the paradox with the empty type]
The theorem assumes that $\varnothing$ is a closed empty type of $T$ and that it is small:
\begin{align*}
\vdash \varnothing : \mathcal U.
\end{align*}
Since $\omega$ has type $\prod_{C:\mathcal U}C$, the dependent product elimination rule applies to $\omega$ at the argument $\varnothing$. Define
\begin{align*}
t := \omega(\varnothing).
\end{align*}
The elimination rule gives the closed judgment
\begin{align*}
\vdash t : \varnothing.
\end{align*}
This is exactly the asserted inconsistency of $T$.
[/step]