Mike,
Sorry for both your kids and the kitty, but your neighbors are saints, no kidding.
My Mom gave me a Jack Russel when I was in flight school...not sure why, but she did.
Everybody loved Harry, but he had a thing for cats. I was living in Coronado, Ca. during my first squadron tour and Harry saw a cat, got off the leash and followed it through the cat door
into the neighbors house
That is where the cat met it's demise.
I was making about $30k a year (1983) and Harry's little adventure ran me about 5% of my annual, without lawyers.
I got off light.