"I do wonder what the neighbour is supposed to do, if towing the car is an over-reaction?"
I don't think towing the car would be an overreaction, but parking him in, then not accepting the first apology and refusing to move his car is. The point is that, after he decided not to have the offending vehicle towed, all the other stuff he did became pointless chest-thumping because the rational decision is to act within his rights (have it towed) or do nothing abnormal.
"I can see the double parking as an okay option if no one else is inconvenienced. So if the neighbour double parked and blocked his spot and that of his wife, and other traffic could still get by I don't see the problem really."
I can't get on board with this. The neighbor had a reasonable option available, which is to have the car towed. Blocking in the car is not reasonable because of this, and on top of that it's petty. He's not rude to be angry that his space is taken, nor to take reasonable action to fix it himself, but he was rude to react the way he did when he had other options.