Ostensibly, the argument proves $\Num{\{1,...,m\}} = \Num{\{1,...,n\}}$ but there are two problems with that: (1) We are using this theorem/lemma to prove that $\Num X$ is well-defined in the first place! Thus we cannot make mention of the notion which is not, as yet, well-defined.
(2) Even if (1) were not a problem, $\Num{\{1,...,m\}} = \Num{\{1,...,n\}}$ just means, by definition, that both have a bijection to some $\{1,...,k\}$, which is to say (by composition of bijections) there is a bijection between $\{1,...,m\}$ and $\{1,...,n\}$. But that was our hypothesis in the first place, and …