As a parent, if my kid did that, I'd likely side with the neighbour. I would put it (very loosely) in the category of "natural consequence" punishments.
It fits the crime, it discourages the crime, it forces empathy with the cat, and it does no real harm.
My neighbors daughter had one of those water guns. I told her if she shoots at me, I'll get the hose and retaliate. She grinned, shot at me, and ran away laughing.
I talked to her dad, he nodded, and when she came back for more mischief, she got wet.
Shouting “Hey, don’t do that” loud and clear may be more effective.
kid may have thought they where alone and will get jumped from getting caught.
May alert the parents their kid is up to mischief.
Doesn’t potentially start an escalation war with neighbors
Doesn’t carry the small risk of the child falling or otherwise getting hurt with you as an easy blame.
Think of it like this: Does the kid now understand the “evil” of their actions to try be better next time. Or will they feel vindicated by their parents support against your “evil”
How DARE you interact with my poor, helpless cat, who I lovingly toss outside to slaughter songbirds, pick up parasites, and maybe get flattened by a car. I don't generally give a single solitary shit what happens to it out there, but this splash of water is TOO FAR.
Edit:
Please stop letting your cat out. It's not good for your cat or the local wildlife.
We've a lot of cats coming through the garden. I wouldn't mind if not for my dog, who does and goes insane when she spots a cat. So I've been thinking about getting a super soaker to chase them away. I think that's pretty harmless, and perhaps they learn to skip our garden after a while... What do you lot think?
You can tell the people in here thinking it's ok to retaliate like that are people that live alone with cats or in their parents basement with cats. I have cats and children. Y'all this isn't the way to go about this.