You don't get it, it's not the dogs!

It's the attitude of their owner. LZ said he can tolerate it if the neighbour just keep their dogs in the back yard. That's a reasonable proposal and a neighbourly gesture of compromise. The problem as I see, is that the neighbour simply refused to even consider and didn't leave any room for further discussion.

People like that needs a lesson, either through litigation or a $2 dog whistle.