To me, the right thing to do is not to feed their delusional sense of entitlement, no matter what type relationship you want with them. JMHO. You did them a HUGE favor and they are just darn lucky to get their dog back; you know, the dog they really don't seem to care about? It would be the last favor I'd do for them. I've already crossed that last bridge with one neighbor. Next time, I'm burning the bridge. I'd hate to think the "friendship" was dependent on allowing their dog to kill my birds, you know?