Take the neighborhood gatherings as an excuse for "special" ice cream excursions or some other treat outing. Schedule play dates with other children at some remove from your neighborhood. After all, why do you want your child to associate with the other neighborhood children if their parents all tolerate the neighbor who "teaches hate"?
Thanks for your help. Unfortunately, we're not always able to leave. It happens EVERY single day. Rumors fly to other neighbors so thier children now are skeptical about being at our house. It's just sad. This is our 250,000 dream house and we thought we were here to retirement....needless to say, we're looking elsewhere. THanks for thinking of me though.
Yes, moving is an option(if you can afford it). However, there isn't any guarantee that you won't move "from the frying pan to the fire". Another tack, (maybe) - try cultivating a friendship with some of the other parents, it seems unlikely that they are all aware of your hateful neighbor's attitude - they might even be sympathetic to your position - you never know.