So they took undeveloped land, and developed it. In the New London case, the land was already developed, and was a residential neighborhood.
The mill acts said that a farmer who damaged (in essence, "took") another's land to build a mill on his own land was not liable.
If he took the rocks and such from the ground sure...but if he took it from the walls of his neighbors house, I don't think it's applicable. Developed vs. undeveloped.
As an aside, "Squatter's rights," like much of longstanding bankruptcy law have a common-law link to the 7 years limit on debts in the OT. The assumption is if the owner couldn't have been bothered with the properties for so many years, that they really didn't have an interest in it anyways. In the New London case, in most of the properties, people were actively living on the direct portion of the small properties. While your argument has some merit for the "investment properties", I think it quite a leap to include actual homes that the owners live in as falling into the category of "undeveloped".
And regardless of whether one walks his fenceline or not, one could argue that private property should be protected whether you EVER use it or not.
I'm not agreeing with the 200 years of American legal tradition---I probably fall more with the "pristine" libertarians who say that your property is your property, no matter what, and it shouldn't matter if your property development benefits ANYONE else.
My point here---and the one people are trying to dodge---is that this, after all, IS the understanding and framework that we have had for almost 200 years, and to ditch that would seem to me to be, well, "Judicial activism."
I think the argument ought to be framed differently: it seems that whether courts uphold existing law or "write" new law, they are always ruling in favor of government over individuals---except when it comes to national security, when they almost always rule in favor of individuals over the rest of us.