I have to comment on this again. I don't really think you went too easy on the neighbor. It was a first time thing. Accidents happen. Yes, people need to keep their dogs under control and they are responsible for their dog's actions, BUT ... accidents happen. I am a FIRM believer that you keep your dogs under control at all times for their safety and the safety of others ... my place is about like Fort Knox for the dogs. But you know what? I have occasionally had a dog get loose. Had a new one climb the fence (fixed the problem), have occasionally had one sneak out the gate the second it is opened (but then we catch them right away), had my stupid cousin let my GSD out after everyone else had gone to bed (when she was in heat and to be sent off to be bred ... nixed that plan
) and not even tell me so she was out all night! Sometimes dogs slip their collars or break their lines (which means they were improperly restrained, the line wasn't heavy enough). The point is, things happen.
Now, it is different when the dog (and neighbor) is a repeat offender. It is different when the neighbor doesn't care. This neighbor owned up to what his dog did and offered compensation. I know that doesn't help the poor birds, but it doesn't sound like it is likely to be repeated in the future. The neighbor cared about what his dog had done. He didn't deny it, or shrug it off, or say it's just a chicken. You have to give him a lot of credit, most neighbors (in my experience) would not have been as honest and conscientious as this guy was.
Now, if he proves me wrong and this happens again, that would be a whole 'nother story!