This is tricky for you!

How did you tell the lady about the incident? Did you say it like you thought it was amusing and you were not hurt or upset? Did you tell it like it was? - scary, unexpected, painful and unacceptable!

You may need to ask her to come to your house, show her the bruises and tell it straight - the dog will end up hurting someone badly and they will take it further. It will affect how you feel about going to your neighbours house and that is not something you want to happen.

The dog is doing it's job, gaurding territory that it feels it is responsible for. In my view the dog should not have that amount of responsibility and will become a liability if this behaviour is allowed to continue.

Tell your neighbours about this site and encourage them to have alook and maybe even ask advice!