The increasing number of users leads to an increase in pilot overhead, and the limited pilot resources make it challenging to support all users using orthogonal pilots. By fully capturing the inherent physical characteristics of the multi-user (MU) environment, it is possible to reduce pilot costs and improve the channel estimation performance. In reality, users nearby may share the same scatterer, while users further apart tend to have orthogonal channels. This paper proposes a two-timescale approach for joint MU uplink channel estimation and localization in MIMO-OFDM systems, which fully captures the spatial characteristics of MUs. To accurately represent the structure of the MU channel, the channel is modeled in the 3-D location domain. In the long-timescale phase, the time-space-time multiple signal classification (TST-MUSIC) algorithm initially offers a rough approximation of scatterer positions for each user, which is subsequently refined through the scatterer association algorithm based on density-based spatial clustering of applications with noise (DBSCAN) algorithm. The BS then utilizes this prior information to apply a graph-coloring-based user grouping algorithm, enabling spatial division multiplexing of pilots and reducing pilot overhead. In the short timescale phase, a low-complexity scattering environment aware location-domain turbo channel estimation (SEA-LD-TurboCE) algorithm is introduced to merge the overlapping scatterer information from MUs, facilitating high-precision joint MU channel estimation and localization under spatially reused pilots. Simulation results verify the superior channel estimation and localization performance of our proposed scheme over the baselines.