Option 1.
I'm sure the current and future generations of aircraft are whisper jets compared to the old 707s and 747s of yesteryear. The airport at Mascot has been around a hell of a lot longer than the good rate paying citizens of surrounding areas - time they harden up and realize why their house was probably cheaper than others not near the airport.
Option 2.
Leave the cap on movements as is, but move regional and light aircraft traffic to Bankstown with underground rail connection to SYD Domestic and International.