I too am curious as to what state the OP lives in. This is ridiculous. The perv next door has made his motivation quite clear. He is intentionally invading the privacy of the OP and taking pictures for his own sexual gratification. If the daughter is under age, then the neighbor should be jailed. I have to wonder what kind of wife the neighbor has that is okay with all of this.
That said, here is what I would do. I would blind the camera with a laser. If it didn't destroy it, I would mount one permanently aimed into the lens to keep it blinded. I wouldn't bother to hide it either, just make sure it didn't go into the sky where some airplane could be hit by it. I would then write a letter describing this whole story and confront the neighbor by threatening to hand it out to the entire neighborhood if he doesn't stop. If that didn't work, I would hand it out to them. Then I would contact the local news and encourage them to do a story on it. Given the trivial things that end up on the news in Houston, I can't imagine them not taking the opportunity to stir some folks up with how the law is allowing this perv to get his kicks this way.
After all that, I think that I'd simply catch him one on one and threaten to clean his clock if he didn't stop. At that point, the PD is not going to listen to him without some kind of proof that he was threatened.