I would definately be reinforcing the fenceline to protect your dogs & children! You can install chain link fence on that side or line the fence bottom with decorative stones. We put paver blocks in several places to prevent wild animals from sneaking into our yard. I had our privacy fence put in almost touching the ground but erosion has made a few low spots. You can even just drive tent stakes in at close intervals to prevent them from coming through if they do keep chipping off pieces. I also read to bury their dog poop where they are digging -- stops them from digging there again.
Here are some suggestions from the "Dig This" site:
--Bury chicken wire at the base of the fence. Be sure to roll the sharp edges away from your yard.
--Place large rocks, partially buried, along the bottom of the fence line.
Bury the bottom of the fence 1 to 2 feet below the surface.
--Lay chain link fencing on the ground (anchored to the bottom of the fence) to make it uncomfortable for your dog to walk near the fence. -- This was written for someone wanting to keep their dog "IN" so you would have to adapt the advice for a neighbor dog.
I wonder if spilling some ground pepper or similar product along the fence bottom would help? I would not want to hurt the dogs (not their fault and you can't pepper the owner
) so might want to run that by a vet to make sure it would only be a deterrent and not hurt.