Oh, glad you are still here. Because I kept wondering about 1/(x-y), and came to the conclusion it actually cannot do nearly as much as eml. So maybe you could confirm if I understood your assumptions correctly and help me to sort it out overall.
In your original post you were kinda hand-wavy about what we have except for x # y := 1/(x-y), but your examples make it clear you also assume 0 exists. Then it's pretty obvious how to get: identity function, reciprocity, negation, substraction & addition. But I effectively couldn't get anywhere past that. In fact, I got myself convinced that it's provably impossible to define (e.g.) multiplication as a tree of compositions of # and 0.
So here's my interpretation of what you actually meant:
1. I suppose, you assumed we already have ℕ and can sample anything from it. Meaning, you don't need to define 5, you just assume it's there. Well, to level things out, (#, 0, 1) are enough to recover ℤ, so I assume you assumed at least these three. Is that right?
2. Then, I suppose you assumed that since we have addition, multiplication simply follows from here. I mean at this point we clearly have f(x) = 3x, or 4x, or 5x, … so you decided that the multiplication is solved. Because I couldn't find how to express f(x, y) = x⋅y, and as far, as I can tell, it's actually impossible. If I'm wrong, please show me x⋅y defined as a sequence of compositions of (#, 0, 1).
3. This way (assuming №2) we get (ℚ, +, -, ⋅, /). Then, I suppose, you assume we can just define exp(x) as its Taylor series, so we also have all roots, trig functions, etc., and then we obviously have all numbers from ℝ, that are values of such functions acting on ℚ. Exactly as we do in any calculus / real analysis book, with limits and all that jazz.
If that's what you actually meant, I'm afraid you completely missed the point, and 1/(x-y) in fact isn't nearly as good as eml for the purposes of Odrzywołek's paper. Now, I didn't actually verify his results, so I just take them for granted (they are totally believable though, since it's easy to se how), but what he claims is that we can use eml essentially as a gate, like Sheffer stroke in logic, and express "everything else" just as a sequence of such gates and constant 1 (and "everything else" here is what I listed in №3). No words, limits, sets and other familiar mathematical formalism, just one operation and one constant, and "induction" is only used to get all of ℕ, everything else is defined as a finite tree of (eml, 1).