Insulation breakdown of dry-type valve-side bushing cores under electrothermal compound stress has become a key factor limiting the safe and stable operation of the converter transformer. Based on slices of the real bushing core, it is observed for the first time that fold, peeling off, and fracture defects exist near the aluminium (Al) foil edge, accompanied by many metal spikes with a curvature radius <4 μm. Coupled with a capacitor screen thickness of ∼2 mm, an electrical tree model is designed to simulate insulation defects near aluminium foil edges inside dry-type bushing cores, whose insulation degradation characteristics under electrothermal compound stress are investigated accordingly. The results show that high temperature significantly increases the dielectric loss heat energy density and Joule heat energy density, accelerating the insulation degradation near Al foil edges. The parallel crepe paper interface significantly accelerates the growth of electrical trees under AC-superimposed positive DC voltage, while this effect is not significant under AC voltage. As the crepe paper consists of wooden fibres of 10 μm diameter, the electrical trees tend to grow along interfaces between fibres and epoxy resin to form “feathery” electrical trees in epoxy resin-impregnated paper samples.