Governments steal lots of stuff all the time. The least they can do is do something useful to the taxpayer with it.
The collection is managed by a charity, The Royal Collection Trust, and other than the tax advantages all charities have, there's no taxpayer involvement here.
I see it no different than displaying some gift in a presidential library. It's simply the right thing to do.
The Chinese government's supposed approach is pretty interesting - https://www.gq.com/story/the-great-chinese-art-heist
plus while something may have come from a region and people of the world that no longer exist and the attachment is in name only. As in, there is no connection to the society that created the works to the one that rules the area now. There is always a case for those stolen within a few generations but going back beyond that is not always warranted. Plus when you get into some art and such who was the last rightful owner, you stole from someone who stole it from another and so on.
I would prefer a world where these antiquities are preserved but open to anyone to see.
I understand what you're saying, but thats like making the argument that you shouldn't have the fancy car because it's safer in my driveway than yours.
You want to redress the past, invent a time machine. Otherwise, it is what it is (or, rather, was).
https://www.wbur.org/hereandnow/2018/08/28/chinese-art-theft