Vettel will start from the pitlane of the Yas Marina circuit after his car was found guilty of a fuel irregularity following qualifying in which he had initially set the third quickest time behind a front row of McLaren's Lewis Hamilton and Red Bull team-mate Mark Webber.
The reigning double world champion was ordered to stop on track on his in-lap after an issue with the fuel system was immediately discovered by engine suppliers Renault.
In the investigation that followed by the four-man panel of race stewards that includes British Racing Drivers' Club president Derek Warwick, they accepted the team's reasoning for stopping the car.
However, under FIA regulations, in scrutineering a litre of fuel is required to be taken from the car as a sample, but only 850ml could be extracted.
It is the belief of Renault, according to Horner, the fuel is within the car, but which cannot be dismantled to help provide the sample.
The FIA initially demoted Vettel to the back of the grid, but with Red Bull having removed the car from parc ferme to investigate the fuel cell issue, he is allowed to start from the pitlane.
A championship Vettel was threatening to steamroller after winning the last four races is now wide open again.
"We'll attack the race, and I'm sure Sebastian will demonstrate to everybody why he's a great racing driver," said Horner.
"He's come from the back and produced great races before, and I've no doubt he can do it again tomorrow [Sunday].
"If he manages to get into the points it will be a great achievement.
"We saw Mark in Suzuka (Japanese Grand Prix) come from 20 seconds behind the field to finish in the points, so there's no reason why Sebastian cannot salvage something."
Horner has admitted to the incident being "frustrating, annoying", but that Vettel accepted the decision with good grace.
"When we told him about the penalty he was remarkably calm," added Horner.
"He dealt with it and said 'out of a negative comes a positive', so now he'll be maximum attack.
"But it's a fair decision. The rules dictate a litre of fuel has to be provided without removal of bodywork or manipulating the car.
"We've no doubt the fuel is in the cell according to what Renault have told us. They are convinced the rest of the fuel is in the tank, but you can't dismantle the cell to give a sample.
"We need to get into the fuel cell to understand what happened. It's a frustrating scenario.
"The car will be worked on tonight [Saturday], then we should have a better understanding and hopefully a cure for tomorrow [Sunday].
"We're working with Renault. They're happy with the margins, happy with the amount of fuel that should be in the car."
Vettel came into the weekend with a 13-point lead over title rival Fernando Alonso, a gap that will almost certainly be cut providing the Ferrari star can bring his car home.
Assessing the penalty initially, Vettel said: "It's the decision of the stewards, so I guess we have to start from the pitlane.
"We'll try to attack. We've plenty of chances, so we will see what we can do."
Asked whether the decision was harsh, Vettel added: "Nobody has scored any points so we will speak tomorrow [Sunday] after the race.
"One of the best ski jumpers of all time (Matti Nykanen) once said 'Every chance is an opportunity and as far as we are concerned there are still plenty of chances tomorrow'."
The penalty means everybody behind the German will move up a place on the grid, notably with Alonso now starting sixth.
Ahead of him on the grid, aside from Hamilton and Webber, will be Williams' Pastor Maldonado, Kimi Raikkonen in his Lotus and the second McLaren of Jenson Button.