Some kids live in areas where trick-or-treating isn't possible - apartment complexes and rural areas, for example. I don't think there's anything wrong with taking them a neighbourhood or two over for their ToTing - it will increase the numbers in that neighbourhood somewhat, but not over the top.
But here it sounds like the neighbourhood has become a destination event, which is totally different.
I would put a word of caution about turning it into an official event - roping off the neighbourhood and blocking traffic generally requires a city permit, and you may need appropriate permits to charge admission for an event on city property as well. You'll need to find a sponsor to cover the upfront costs (security guards, permits, buying tons candy because if it's a paid event you can't run out before the end of the stated time), or shell out the money as a neighbourhood hoping to recoup the costs. You may need to arrange for appropriate parking for the event, or risk problems from surrounding neighbourhoods, and make arrangements for clean-up of city property at the end of the event. And you'll need fairly unanimous agreement from the neighbourhood that this is a good idea, and a dedicated and competent committee to handle the organization and legal/financial stuff.