Hi there,
it sounds as though you will definitely need the help of the neighbors to fix this problem, so it is very lucky that you get on well with them.
It is always hard to make a diagnosis without actually being there and seeing the dogs interact, but from what I can gather it seems that Daphne is trying to protect Missy.
Especially if her aggression started when Missy came along.
I personally don't like electric fences at all and I think it would be a good idea to build a proper visible fence if you can.
I know you said that you don't want to hear about "Alpha Dog", but I really think that is the solution to most issues. If your dog accepts you as the leader they will always look at you for guidance on how to behave.
You make the call (or in this case your neighbors) make the call on whether Missy needs protecting or not, not the dog.
When I got my first pup I had some issues with her as she was very dominant. Once I started implementing the main rules of being the pack leader things changed overnight. Now I constanly have people commenting on what a great dog she is, people "fight" over having her when we are on vacation and she is simply great.
In your case it seems that Daphne is the issue and therefore your neighbors need to do most of the training.
The most powerful gestures that show that you are the leader are:
-control over food
-control over toys
-control over greetings
-control over the walks and generally being outside
Your neighbors should always eat before the dog, everyone in their family should including the baby. This should happen in full view of the dog with no one paying attention to Daphne.
Your neighbors should control the access Daphne has to toys and change them whenever they feel like. They should always remove the toy after a game and make sure that Daphne sees that they control it.
They should always ignore Daphne when "reuniting", they should never pet Daphne when she asks for it. She should sit or do another command before receiving attention.
Your neighbors should be in control of all walks, which means that they determine the direction and if the dog pulls one way out of habit they should make and effort to walk the other way.
Perhaps you should aks your neighbors if they are willing to really work on it.
I would definitley not let the dogs go for each other even with a muzzle, as it will be a very bad example. You will probably watching without interferring which sends a strong signal that you are okay with this sort of behavior.
I think in order to solve the problem you will need to do the following:
1. Your neighbors will need to be the pack leaders and Daphne needs to accept this.
2. Next they will need to establish Missy as higher up in the rank than Daphne
I know that a lot of people just let their dogs choose who is where, but in this case it is important to interfere as it is obviosly not working. Missy needs to sleep higher and get fed first. She needs to get attention before Daphne and if Daphne tries to dominate Missy Daphne needs to be removed and put in a time out. This will take some time, but might be the only way.
3. Once Daphne has accepted her rank you will need to re-introduce her to your dogs and establish an order. Try to avoid any contact between your dogs and Daphne while the training process is happening, otherwise it's a step backwards.
I hope that helps in the meantime, please let us know how you get on.
Cheers
John
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