Yet another self-defining AP parent here who thinks the scenario in the OP crazy and disapproves of that strategy being associated with AP. (This actually seems like rather an odd connection - I wonder whether Iucounu was conflating AP and UC, unconditional parenting? UC is also interesting and influential on me, and there's a naive interpretation of it that might lead to this scenario, so that would make sense. They're different things though.)
I see attachment parenting as being about honouring needs and wants and feelings - but part of that is about distinguishing those things from one another, and a lot of it is about recognising that everyone has them! As I have a singleton I have only theoretical ideas about how to deal with sibling issues, but I do of course deal with situations where DS's needs/wants conflict with mine or DH's or someone else's all the time.
I'd certainly let child S play with something that wasn't the exclusive property of child E and wasn't being used by E at the time, even if E didn't like it. I'd be interested in why E didn't want S to use it, and in an ideal world would talk about that with her (while S went off with it!), though. One of the most helpful ideas I've accrued from somewhere (probably my own therapy, come to think of it :-) is that all feelings should be acceptable: the place to intervene is where you decide how to express or act on the feeling. Far more helpful to say to yourself "I feel as though I don't want anyone else to play with that - but actually there's no reason she shouldn't, so I won't object" than to say "I shouldn't feel that". Tricky with a 5yo, but even then, one can criticise the behaviour rather than the feeling.
