Wow! Your neighbor sounds a lot like mine. But worse!

My neighbor's grand kids liked to tease my dogs through the chain link fence, so I put up another fence 10 feet inside the one on her property line. Then it was the barking that she couldn't stand. I ended up installing a 6 foot tall, solid wood fence all around my back yard.
I had been feeding the stray cats in the neighborhood after getting them spayed/neutered and immunized. She didn't like them digging in her flower beds, so I had to build a large pen for them or she was going to catch them and have them killed.

This was last August; I still haven't spoken to her. I learned recently that she was hospitalized for mental problems. But her son-in-law and daughter (who live with her) are now talking to me again.

It sounds like cruelty for her dog to be so matted. It IS painful.
I'd be inclined to do the same thing you plan to do. But she might have legal grounds if she finds out. Be careful.

And good luck.

Mary