IMO the question is more one of compensation and property rights. Now for some people, property rights are a moral issue (ie. good vs. evil) but I think for most people, property rights is a Law vs. Chaos issue.
So IMO the issue would be resolved by going to the Law elements of the paladin's faith and asking "what is his legal obligation?". What would the paladin believe to be the legal rights of the PCs in question? If there's no lawful reason why he should compensate them then I don't think he would/should (again - assumes that good/evil, while relevant to destroying the item in the first place, has nothing to say on the issue of compensation).
I think it's reasonable for the paladin's religion to offer some guidance on this issue - it has to be fairly common for holy warriors to wind up dealing with evil magic items, and regardless of whose property it is, the question of whether or not they owe an owner compensation would probably be addressed in the legal codes of the paladin. Whether or not the paladin had enough skill points in Knowledge-Religion to answer this question for himself is another thing.
For example, what happens if the paladin finds out that some lord's castle is accidentally built on an ancient indian burial ground and the castle has become evil? The castle must be destroyed, yet the current lord really isn't at fault. Given that the paladin's faith is good, and that the family of the lord will be homeless, some compensation by the temple would seem to be in order. I think it's fairly reasonable that this issue would have been considered by the wise temple leaders and some general law or practice would have developed. And the law would probably be pretty detailed. For example:
1. if you weren't aware of the evil nature of the item when you acquired it, and can prove such to the satisfaction of a tribunal of clerics of our faith, then you're owed half the price that you paid for the item
2. if you were aware of the item according to the sworn testimony of a guardian of the faith, then you must forfeit the item to the temple without delay. A tribunal of clerics will further assess any damages for which you are responsible (ie. paying for exorcisms for people that your evil magic item possessed)
The issue could be further complicated by battles in jurisdiction between custom, secular, and temple law. The complexities of this in actual history are enormous but there is tons of room for interesting roleplaying. IMC I treat the "rights" of the other PCs in this case as custom, and would expect the paladin to do so as well. I would have to assume that paladins, who are trained to kill on behalf of their faith, get some education from their temple with regards to the laws of their faith.
Whether the other PCs want to respect the law is up to them. As is whether or not they want to pursue compensation with the paladin's temple, the local authorities, or by trying to kill the paladin. Most likely the paladin and his temple would have a solid opinion on this as well.
So IMO the issue would be resolved by going to the Law elements of the paladin's faith and asking "what is his legal obligation?". What would the paladin believe to be the legal rights of the PCs in question? If there's no lawful reason why he should compensate them then I don't think he would/should (again - assumes that good/evil, while relevant to destroying the item in the first place, has nothing to say on the issue of compensation).
I think it's reasonable for the paladin's religion to offer some guidance on this issue - it has to be fairly common for holy warriors to wind up dealing with evil magic items, and regardless of whose property it is, the question of whether or not they owe an owner compensation would probably be addressed in the legal codes of the paladin. Whether or not the paladin had enough skill points in Knowledge-Religion to answer this question for himself is another thing.
For example, what happens if the paladin finds out that some lord's castle is accidentally built on an ancient indian burial ground and the castle has become evil? The castle must be destroyed, yet the current lord really isn't at fault. Given that the paladin's faith is good, and that the family of the lord will be homeless, some compensation by the temple would seem to be in order. I think it's fairly reasonable that this issue would have been considered by the wise temple leaders and some general law or practice would have developed. And the law would probably be pretty detailed. For example:
1. if you weren't aware of the evil nature of the item when you acquired it, and can prove such to the satisfaction of a tribunal of clerics of our faith, then you're owed half the price that you paid for the item
2. if you were aware of the item according to the sworn testimony of a guardian of the faith, then you must forfeit the item to the temple without delay. A tribunal of clerics will further assess any damages for which you are responsible (ie. paying for exorcisms for people that your evil magic item possessed)
The issue could be further complicated by battles in jurisdiction between custom, secular, and temple law. The complexities of this in actual history are enormous but there is tons of room for interesting roleplaying. IMC I treat the "rights" of the other PCs in this case as custom, and would expect the paladin to do so as well. I would have to assume that paladins, who are trained to kill on behalf of their faith, get some education from their temple with regards to the laws of their faith.
Whether the other PCs want to respect the law is up to them. As is whether or not they want to pursue compensation with the paladin's temple, the local authorities, or by trying to kill the paladin. Most likely the paladin and his temple would have a solid opinion on this as well.