I know I'm a little late to this part of the issue, but it certainly seems as if you have some grounds for criminal warrants against the dog owner, namely the verbal threats from your neighbor in which you and your wife were threatened, the threat from the dog before it was neutralized, and the lack of their control of their animal in general. With the threats made, a Protection Order against the aggressor will make their life hell for some time too...Guess what? The dog owner had me arrested for animal cruelty. Now I have to hire an attorney to fight for my rights. Can you believe this?
Saluda Chickens
You may also have grounds for a civil claim for damages. Their animal was not properly restrained and you suffered losses as a result.