First of all, I am so unbelievably sorry this has happened in your neighborhood. I have heard similar stories to this, and everytime it makes my stomach turn over.
Second of all, you are absolutely right that something needs to be done about that pit bull. Pit bulls are illegal in several states for a reason. I'm in no way saying that all pit bulls are vicious, but they are extremely tough and if you are going to own one, you have to take special precautions to ensure that they and all dogs around them are safe.
There is a pit bull that lives in my apartment building.
I hope that his owners take more precautions then those you know...