If you are in code, and doing everything correct, then let your neighbor call the fire department. And let the fire department then explain to her you are doing nothing wrong (and maybe bill her for the cost of a false report). Sadly, it may take this "upper" authority to convince her. You and her back and forth will clearly never convince her. (Edit: what
@cygnus posted 10 minutes before me....
)
I know it sounds brutal.... And even that may not work for a neighbor unwilling to compromise.
I suggest this because been there... done that... and that is what it took for us
**. I can only hope it works for you.
But be aware, some neighbors will be completely unreasonable and egocentric. And even with the fire department approval what you are doing is okay, they may settle for nothing less than demanding you still not heat by wood at all. Which means you can still heat by wood if you follow the law in your area. And simply need to accept your neighbor is going to hate you for it. Worst case scenario. You may have to live with it.
Hope this helps.
** Weird side note -- my wife was at a government office and she realized our neighbor was there also, asking if the office could "adjust" things so we were not code compliant... Yes, the neighbor actually tried to get the local government to adjust our legal status. Of course the office said they could not do this. Only shows how some people can go to some significant extremes......