Sounds like to me there was an underlying problem he had not addressed and he was looking (and finding) an outlet for his problem. It was an ugly remark and you could have laughed it off and gone on about things...but something tells me there is more to this than meets the eye.

The first question I asked myself after reading this was, "Okay, now tell me what's REALLY wrong." And I would have addressed him with that question.

I think the fact that you both didn't really talk it out says there is some miss-communicating going on.

Why asked him to run it by the neighbor? You two should be able to sit down and get to the bottom of it. Leave the neighbor out of it. I know you were giving him a choice, a way to see it from another perspective, and that's gracious of you, but it should not be necessary.

Just my two cents...