Hi Amy !! i just found this thread !!! OMG , what terrible neighbours you've got there !!! We are lucky in that way !!
Just once , we had a neighbour that saw me walking on our drive way with Sydney , my RB-cat . He came closer and said that my cat had bitten one of his daughters and that she was scared of all cats now !!!
I then told this creature that my cat was an indoor cat , and he never ever has been outside once in his life ...
The man turned pale , and apologised ...... . Since then , everything is okay !!!

What disturbs me the most on that letter you've got , is that it is sent anonymous !!!! So cowardly !!!!!!!!!!!