Also nice! Here's another way to explain it: Y is a K(G,1), therefore
[forall (y:Y), y=y] is the center of G (futzing with steady functions
is "just" a way to prove this without invoking any particular
construction of K(G,1)). In other words, a qinv-univalent universe
can contain a K(G,1) only if G has trivial center; therefore, since we
can construct a K(pi_n(X),1) from X by taking loop spaces and
connected components, pi_n(X) must have trivial center -- and thus, if
n>1 so that it is abelian, must be trivial.
Note that all of this depends on which type formers we assume our
qinv-univalent universe to be closed under. Your construction requires
propositional truncation, which can be obtained as a HIT. However,
it's inconsistent for a qinv-univalent universe to be closed under
*all* HITs, since S^1 is a K(G,1) with nontrivial center (the proof of
this works just as well with qinv-univalence).
If we're willing to also assume closure under set-quotients, then I
think I can show, building on your argument, that *all* 1-types in a
qinv-univalent universe must be sets. Suppose that X is a 1-type,
with z:X and q:z=z. For any x:X, consider the equivalence relation on
the set z=x defined by p ~ r iff p r^{-1} = q^n for some integer n.
Let Q(x) be its set-quotient, and let R = sum(x:X) Q(x). Of course, R
is a 1-type.
First of all, I claim that R is connected. If (x1,r1):R and
(x2,r2):R, then since ||(x1,r1)=(x2,r2)|| is a mere proposition, we
may assume r1 and r2 are the images in the set-quotient of p1:z=x1 and
p2:z=x2. But then p1^{-1} p2 : x1 = x2, and transporting p1 along
this path gives p2; hence transporting r1 along the same path gives
r2. So (x1,r1)=(x2,r2).
Thus, R has a unique fundamental group (up to non-unique isomorphism).
It has a basepoint coming from z and refl, and its fundamental group
at this basepoint is the group of paths p:z=z such that p = q^n for
some integer n. But this group is cyclic, hence abelian. So by your
Lemma, R is a set, hence contractible, and thus q = refl.
In conclusion, if a qinv-univalent universe is closed under the basic
type constructors, as well as propositional truncation and
set-quotients, then the only n-types it contains are sets, and thus
its types have no nontrivial homotopy groups. In particular, there is
no hope of naively constructing such a universe in the simplicial set
model by taking a full subuniverse of the standard one. But can we
say anything about possible nontrivial oo-connected types in a
qinv-univalent universe?