Land and borders have been seized all over the world throughout history. And borders have been drawn by armed conflict.
In this case it's the Arabs who want to preserve the status quo as seized during the conflict, and Jews who want to revert to the pre war ownership 75 years ago.
The idea that the victims of a war should be treated the same way as the aggressors (or their supporters) is not one that would be said, let alone taken seriously, in any other context.
Historically speaking, I don't think it's accurate to portray Jews in East Jerusalem as victims of the 1948 war and Arabs as aggressors. From a technical perspective I believe Israel declared war and abandoned the UN partition plan prior to organized Arab resistance.
If you accept that the victor of a war can void previous ownership of land and award it as they wish, the rightful owners are those accepted by the Jordanian victors.
Also, you are conflating individual ownership with political control which are two very different considerations.
I think you may be missing the details - I am talking 100% about individual ownership of specific properties. Arabs who abandoned their houses pre 1948 (many neighborhoods in West Jerusalem) cannot sue for it under חוק נכסי נפקדים, and Jews can (the current story in East Jerusalem).
It's not necessarily unfair, or the Israeli courts would strike it down, but it is understandably upsetting the Arabs.