Those are some interesting results. If you don't mind, could you see what happens if you assume a fight length of 30-60 seconds, without IV and TW? I assume this is a case of sim vs. reality.
The issue here might be that Blizzard gains DPS value from its ability to reset the orb while Frost Bomb does not. However, Frost Bomb benefits much more from orb uptime than Blizzard does because it utilizes the generated procs to do damage, which in turn benefits from T20 2pc again. Consequently, Blizzard has high value on continuous fights such as the one you simulated while Frost Bomb benefits from a relatively high orb uptime compared to total fight lenght, which is more common in M+ dungeons with frequent breaks of different lengths between fights.
The relative DPS value of Blizzard over the course of a full dungeon compared to Frost Bomb declines when some of the orb reset time happens out of combat, which is not considered in your sim. As targets die one by one, orb reset time also gets longer.
Both of these effects seem to point in favour of the more bursty Frost Bomb playstyle if the two options are this close in a simulation already.
Sims aren't going to tell the full story here. You're forgetting the value AG gives you in a dungeon. It's not just the pure DPS gain from AG at this point, it's the increased radius for blizzard ticks which is extremely valuable. Especially with T20.
Also to comment on your results, since I don't know how you came to your conclusion I can only make assumptions. BUT I'm going to assume you only tested it in a handful of dungeons with various ranges of mob count and key level. Given that you're not going to get accurate results to compare it to Arctic Gale. Unless you ran the same exact dungeon with the same exact group multiple times.
Regardless of that the truth is the current iteration of Frost Bomb is not a viable option if your goal is to push keys or rather even do keys appropriate to your skill/key level. It may outperform Arcitc Gale on lower keys, but that's not the point of this guide.