 Solution

The canonical geometric morphism $\hat{\mathcal{C}}\to \mathbf{Set}$ has inverse image the constant-presheaf functor $\Delta$ and direct image the global sections functorIf the presheaf topos is a local topos, $\Gamma$ is also the inverse image of a geometric morphism $g:\mathbf{Set}\to \hat{\mathcal{C}}$. This morphism has an extra left adjoint $\Delta$. Apply part (iii) with source category $1$ and target category $\mathcal{C}$, using its idempotent-splitting hypothesis. Then $g$ is induced by a functor $1\to \mathcal{C}$, choosing an object $C_0$, and $\Gamma$ is naturally evaluation at $C_0$.

Since evaluation at $C_0$ is $\mathrm{Hom}(y{C}_0,-)$, this says $\mathrm{Hom}(1,-)\cong \mathrm{Hom}(y{C}_0,-)$. Uniqueness of representing objects gives $y{C}_0\cong 1$. Thus $\mathcal{C}(C,C_0)$ is a singleton for every $C$: $C_0$ is terminal.

Conversely, if $C_0$ is terminal, $y{C}_0=1$ and $\Gamma (P)=P(C_0)$. Evaluation at that object preserves finite limits and has a right Kan extension as right adjoint, so is an inverse image functor. Therefore, under the permitted idempotent-completeness assumption,