The problem I am given is:
Let $T$ be a positive operator. Prove that for all $x,y$ we have
$$|\langle Tx,y\rangle| \le \langle Tx,x\rangle^{\frac{1}{2}} \langle Ty,y\rangle^{\frac{1}{2}}.$$
Now, it seems to me like, by positivity of $T$, we have some $A = T^{\frac{1}{2}}\ge 0$, thus $A=A^*$ and
$$\langle Tx,y \rangle = \langle A^2x,y \rangle = \langle Ax,Ay\rangle.$$
Then we notice $\langle A\cdot,A\cdot\rangle$ defines an inner product, and Cauchy-Schwarz gives us (is) the desired inequality? Am I missing something or is it this simple?
Well, you do not quite have that $\langle A \cdot, A \cdot \rangle$ is a inner product. $T=0$ would be a counterexample.
The Cauchy-Schwarz inequality for $\langle\cdot,\cdot\rangle$ suffices.
$$|\langle Tx,y\rangle |=|\langle Ax,Ay \rangle |\leq \|Ax\| \cdot \|Ay\| = \sqrt{\langle Ax, Ax\rangle \langle Ay, Ay\rangle } = \sqrt{\langle A^2 x, x\rangle \langle A^2y, y\rangle }= \langle Tx,x\rangle^{\frac 12} \langle Ty,y\rangle^{\frac 12} $$