When imaginary play goes too far

A few months back I dropped my 5 year old son and 3 year old son off at a friends house while I went to see the doctor.
After I returned I asked the usual, “How were they?”
My friend told me they were great and then asked me if they always got so involved in imaginary play.
I asked her exactly what she meant and she told the following story:
Ethan and Caleb were playing in a little kids tent that this family owns.Caleb  (3), used some imaginary keys to unlock some imaginary windows and doors on the tent. Then he went inside.
Ethan (5) then reached in at Caleb and “grabbed” the imaginary keys from him, and proceeded to lock all the imaginary windows and doors.
Caleb began freaking out. He was yelling for the keys and sobbing in a matter of seconds because he couldn’t get out.
My friend told Ethan he ought to give the keys back to Caleb. Ethan cooperated and Caleb unlocked the many windows and doors and then let himself out, after which he finally calmed down.
I listened in awe, not sure if I should laugh or be concerned. Never had I ever seen my boys put on a display of that magnitude. Sure, they use their imaginations in play but they had only ever offered me an imaginary bite to eat every now and then.
Now I deal with fights over imaginary objects on a regular basis.
For weeks now it’s been the Piston Cup, from Disney Pixar Cars.
They’ll have a foot race, one will win, and then hold out his hand diplaying this grand Piston Cup.
Then the other will steal it. And they go back and forth stealing an imaginary Piston Cup from each other and crying.
I’ve tried reason – “It’s just fake, imagine your own Piston cup!”
I’ve tried pleading with the more mature child – “Ethan, you are 5 years old, you understand this Piston Cup thing is fake, but your brother doesn’t. Now stop stealing it from him!!”
I’ve tried joining the tangle – “The Piston cup is mine!!! There, now stop fighting over it!”
What in the world do you do when your children are quarreling over something intangible? Have you dealt with this from your kids? How did you solve it, or have you yet?