Purg, you are a wonderful person! I was tearing up reading your post. It is so sad when kids have to go through something like this. I, too, hope that it will serve your neighbor as a wake up call.
I also hope that this situation proves to be a blessing in disguise for you and your H. What happened is certainly no coincidence.
How long will the boy stay with you? Did you H say more about how he'd change his arrangement?