First and foremost, thank you for choosing justanswer.com. I am a licensed criminal defense attorney, former Assistant District Attorney in Pennsylvania, and member of the American Bar Association.
You first ask if she can file the exorbitant amount of police reports against your husband and the simple answer is "yes", so long as the police believe there is probable cause to file such police reports against your husband. That being said, it certainly sounds as though the police are in your neighbors' "pocket" to some degree, or the police are unwittingly giving your neighbor the benefit of the doubt.
The fact of the matter is this: a higher court has found these reports to be unsubstantiated and that should send a red flag to not only the lower district magistrates but to the police officers as well. Something needs to be done about this, and it does not seem as though you should go through the police . . . (I will tell you what to do in my answer to your second question.)
To answer you second question . . . I do believe you have an extremely valid claim of malicious prosecution against the police department and your neighbor and you have a valid claim of false reports against your neighbor as well. 59 counts of each! You cannot go through the police department for the reasons listed above, so you need to go to your countys District Attorneys Office and file a "private complaint". Let the District Attorney's Office know the history of the complaints filed against your husband and let them know all of the facts surrounding the case. You will then bring your complaint to a district magistrate and follow your complaint through the courts from there. I also believe you may have a civil complaint as well but, being in the criminal field, I cannot be sure!
I hope this helps you in your situation; a situation, I might add, I do not like to hear of as a former prosecutor. Please, click "Accept" if you found my answer helpful so I may receive credit for my response. Do not hesitate to contact me via justanswer.com with any further questions or concerns. Thank you and good luck!!!