Reddit reviews Vicious Circles: On the Mathematics of Non-Wellfounded Phenomena (CSLI Lecture Notes)
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yes, but ∅ is not contained in {}, i.e. ∅∉∅. So your thinking isn't quite right yet.
As for "Russell's Paradox does not exist in the real world"... I suggest reading Vicious Circles or The Liar: an Essay on Truth and Circularity. The theory of non-wellfounded sets is closely related to the topic of circular programming, self-referential data structures, and value recursion, such as my paper on corecursive queues. The bibliography includes a few references to a few of the classic works in this area.