Any ideas on how to handle neighbor from Hell?

Sorry. TLDR.

Neighbor next door is a crazy nut job. I used to think it was her husband that was causing problems, until they got divorced and he came to pick up their kids and I was in the front yard and he told me how sorry he was that he had moved her in next door to me.

Over the years she has called police on me because my car was in the street (legal), called the police because my boat was in the street attached to my SUV (legal), called the police because we put in a portable basketball goal between the curb and the street (legal), called the HOA because my boat was in the driveway for cleaning (legal and permissible by HOA), harassed my yard crew because they mowed 6" of her yard across the property line, turned me in to the HOA because my fence gate was 1" higher than the 6' limit (HOA said don't worry about it. The bitch had to have come into my yard with a tape measure to know) and had the police come out because we were having a party and people were (gasp!) drinking alcohol in the front yard (sitting on our front porch... and legal). She comes over and takes the empty trash cans after the trucks come by and lays them on their side in our driveway if we aren't there during the day. My neighbor saw her do this and told me, so I had to ask her to stop. She said it makes our cul de sac ugly to leave them out at the curb. I had to tell her three times to stop. She demanded I hire a crew to cut back limbs over her house from an estimated 140 year old oak tree that bisects our property line. She got pissed when I told her she's responsible for her side and I'm responsible for mine. So she waited until I was gone on vacation and hired a tree trimmer who cut all the way back to the property line huge limbs, some as large as 36" in circumference. I should have sued her and the tree trimmer for endangering the health of the tree.

The latest is she was demanding I replace the fence between our properties because she just put in a new pool and she wanted a higher fence to protect her privacy. I had a survey done and it showed the fence was exactly straddling the property line, so I offered to pay half. Instead, she would pull boards off the fence (all nailed on from her side) and throw them into my yard. I left her alone and just reinstalled them, but did tell her to stop pulling off boards deliberately. She continued doing it, so I finally had to ask the city to step in and cite her for creating a hazard. It's a requirement to keep a six-foot fence if you have a pool and she was pulling boards off and creating two-foot openings. I continued to offer to pay half the cost of a new fence and even obtained three quotes, which I sent to her. She never replied. Instead, she got her own survey to "prove its YOUR fence". The survey showed it was on the property line, just as my survey had already shown.

So instead of working with me and me paying half, she went ahead and contracted and paid for her own fence, which she had installed one-foot inside her property line. That was a month ago.

Yesterday, I took down the older fence. In the process she starts yelling at me out of her second story window that "you have to replace it with a new fence" (which I don't), "you're a constant thorn in my side" (which I'm not. I've never been to her house, talked to her in any way other than respectful, or done anything to her or her kids), "get your god-damned car out of the street". I just asked her very nicely to tend to her own business and I'll tend to mine. She said, "I put my fence up inside the property line, so you have to put up a fence up in yours. You can't use my property from your side!"

She didn't stop her harassment. She got a ladder and put it against the fence (8' tall) and continued to harass me. Rather than talk with a crazy lady, I would just take breaks, go inside until she disappeared and start working again until I was through.

This occurred five times, yesterday. Each time I started again, she would go up the ladder and start yelling at me. Then she finally yelled at me, "If you don't put up a fence then you owe me for half of my fence!" That's when I finally said, "Look... you had the opportunity months and months ago to partner with me on the fence. I would have paid half, and we would have fairly flipped a coin to determine which side would see the posts and horizontal stringers and which side would see only the pickets. You chose to act on your own, and the posts and stringers are facing my side. I didn't have a voice in the selection of contractor or in which side faced into my yard. You also clearly installed it on your property, so I don't owe you a dime. If you think you can collect on that, you're welcome to take me to court and try."

This morning, my wife called. She went outside on the patio to call in our dog, and this woman was up on her ladder peering over into our yard and she started harassing my wife. According to my wife, she said to crazy lady, "What are we doing that has disturbed you so much?" Crazy bitch said, "You know damn well what you've done! And one foot of this (pointing down to the ground) is mine. You can't use it! You have to put up a new fence on your side!"

I hate to call the police in, but this has gotten to be ridiculous. I can handle anything, but my sweet wife is the kindest person on the planet. She hosts a Bible study group, volunteers and fund raises for every charity imaginable and I don't believe I've ever even heard her fart. Seriously. She's the epitome of the eternal optimist who always looks for the good side of everyone. She doesn't deserve some nut job looking over the fence and harassing her. I'm afraid this woman next door is teetering on the edge of losing control of herself and I have to protect my wife and family from this lunatic.

Should I call in the police, now, or just ignore her (as I have for a decade) and hope she eventually just chills the frick out? I'm afraid calling in the police will just enrage her even more than she already is and it might just be like throwing gas on the fire.