I was thinking you could go play frisbee with the kids!! I'm sure you could hit the old a** if you really tried!!! "Oops! I'm so sorry! It really got away from me there!"
Rev your car engine when you are getting ready to go somewhere... you know like one of those crazy kids!!! Those street racers!!!! (your just warming it up)
And Honk real loud and long when you are waiting for the kids to come out!!! (you have to get their attention)
Walk your RATs(really awesome terriers) by their house as often as you can!!! And be sure to let them walk on their lawn... (their feet can handle the heat of the pavement for very long! they have to step off!)
Oh and one more thing!! Pick up a box of fire crackers!!! The big ones!! like M80's then..... Very randomly... set one off... day time, night time... any time... one a week... not for 5 days and then 2 in one day.... skip 2 days let off 1 then wait 4 days.... and so on... Maybe set off one of those rapid fire ones every now and then.... lol maybe you can give him a heart attack!! Better than arson!!
Your house wont catch fire! lol
If they think they have bad neighbors.... show them what bad neighbors are really about! Kill them with everyday activities! And Smile!!! Don't let that Old Goat get your Goat!!! Teach your boy to say something nice when the geezer next door or down the street yells at him! Something like.... "Ohhhhh, your soooo sweet! I'll be sure and tell my mom you said hello!" or "Sorry, I can't talk right now, but lets do lunch sometime! Catch ya later!" And one my daughter uses when people say aweful things to her.... "Comming from you... I'll take that as a compliment! Thank you very much!"

Just enjoy your home... don't let these guys get to you!! And for heavens sake... don't tip toe around them!!! Don't teach your kids that they have to hide or alter their lives beyond whats normal.... and it sounds like the guy next door is asking for your kids to not be normal kids.... Screw the long summer for your kids... its going to be a long summer for him!!! Thats more like it!!!