I would absolutely proactively mention to your friend that you had some issues with her neighbor's work, and that while he may be a most wonderful neighbor, she may want to be more circumspect in reffering him to others. A bad recommendation can affect relationships, business or personal. You don't have to say he was "bad" but share that you want her to be aware of workmanship issues you experienced, before she extends further recommendations of the fellow.
Examples from my experience: My neighbors and I have swapped contractor recommendations, I have had one that worked out badly, many that worked out well. I have had recommendations from family, who are in the realty business, most worked out well, one failed spectacularly and discussions, if not hilarity ensued.
When a plumber recommended by neighbor gouged me (overt padding of hours worked) I did not say anything to thhe referring neighbor until it happened to come up in conversation - I was non-committal (not overtly critical) but described the outcome, neighbor was appalled and apologetic. I explained there were no hard feelings, and they were happy to know of my dealings with plumber and not refer him in future. Had my neighbor staunchly defended an example I was not directly criticizing, but which was out of line to anyone having had similar work done, I would have stepped back from certain discussions with that neighbor, some of which have involved our bordering properties - I was relieved when they expressed concern/regret at the outcome of their referral just on the facts.
With the "bad" family recommendation, they referred a contractor who had apparently done exemplary work for family members and their customers. I now understand that that particular contractor's business had grown so much (during realty bubble 10 years ago) that he had begun subbing out work to unvetted, unknown workers and the contractor did not have time, nor a system to allow him to oversee the work being done. When I explained the issues to my referring family members, they were initially *very* defensive regarding the contractor, I wound up inviting them all over to see the issues and photographed the problems with all present. The contractor wound up in tears before the tour was through, my referring family member apologized to me - I did not pursue recovery for damages against the contractor but I also did not pay him for the small bits done acceptably, and he was out of business due to larger issues within a year. I did discuss with those two family members that while they had previously had outstanding experience with the guy, they should be careful in future to not dismiss complaints/concerns from their clients regarding referred contractors, whose circumstances may change, or who may not have a necessary skill set available - as a referral, and friendly assurance from an otherwise uninvolved party can reflect on them when any contractor/service person performs poorly.