In an abstract sense, the "foreign" settings were written by people who weren't actually very familiar with the real world settings that inspired the genres and thus ended up relying on exotic stereotypes. A person raised in Arabic culture is going to have a very different concept of an "Arabian Adventures" setting than someone who wasn't raised in Arabic culture.
Then they should write that book/boxset and sell it to me. Otherwise... Al-Qadim works fine for my fantasy game of makebelieve. I don't care about authenticity for another person's feelings about a game *they* are not playing with *me*. I care about perceiving something as "good" to use in *my* presentation to my players at a level *I* am fine with.
Stereotypes exist for a reason. Whether someone "feels bad" about a specific stereotype - is not my problem. No one is being forced to consume anything they choose not to consume. Win/win.
You don't need to hire sensitivity readers. Just hire consultants from the pool of people with degrees in Arabic studies. An "Arabic Adventures" setting isn't going to have Muslims running around in it anymore than the standard generic pseudo-medieval European-inspired fantasy setting is going to have Jews and Christians running around in it.
Or you know... you can just watch a bunch of Harryhausen movies and copy that, if that's what you want to play. I'm Asian, and I'm a Herculean-level fan of Oriental Adventures and the Kara-tur Boxset. I'm pretty confident that no one at TSR or Mike Pondsmith has a degree in "Asian studies" when they wrote those books. Did they get things "historically" wrong? Sure. Point me to an RPG book that gets any analog culture 100% accurate for a *fantasy elf-game*. That's the whole point - it doesn't need to be. If it's an issue - and you're the GM and you perceive it as an issue, fix it at your table. I do it all the time.
What is the point of being offended that a stereotype is being used? What *ISN'T* a stereotype by the standards of someone looking for something to be outraged at?
Make it good and interesting. Play the game how you want. RPG's aren't making people racists and they're not supposed to be historical textbooks you're going to be tested on. "Cultural appropriation" is a stupid idea. It seems to me that RPG's as a hobby is collecting passive-aggressive racists in the form of "Progressives" that are bringing their own inherent bigotries to the hobby and placing those bigotries over the engagement of the hobby itself in order to control things.
Eh, I got dice to roll and fun to be had. I.e. "Better things to do".
Edit: And why wouldn't/couldn't an "Arabic Adventures" setting have Muslims running around in it? Or Jews and Christians in a European game??? I'm confused? Are those elements magically verboten?