Remember your neighbor might not limit himself to legal retaliation, what if he has some friends come, at 3:00 A.M., wearing ski masks, and they slash your tires, put a potato in your tailpipe, key your van and personal car's paintjob, then shoot out your cameras, your cars' windows, and throw some bricks through your first floor window? insurance might pay for most of it, but you'll lose time on whatever job you're working on, and your premiums will go up, retaliation might end in your neighbor leaving, or it might end with you sleepless at night looking out your bedroom window for vandals, with financial difficulties.
I agree with gfretwell, not a good idea, deal with this via normal routes, with an attorney, through the city.
Getting even is, IMO juvenile and will most likely not end well, the megger trick may end up with you paying for several grand of electronics, and may even land you in jail, your other neighbors will dislike you for waging this personal war at their expense.
JMO
-Will