IMO, I'd opt to have the cats put in the y-pipe up by the collectors. I think they'll last a good deal longer...just make sure you provide heat shielding for the fuel lines on the drivers side.

 

It really depends how far back the end of your y-pipe is.

 

I'd say screw the neighbors. My car is pretty loud too without a cat and I could care less about what they think. I have one neighbor that complains and calls the cops on me. SO there for a while everytime I went by her house I'd rev it up or nail it. Needless to say after calling the cops and them never catching me. (I only done it when I knew they weren't around) she give up and quit complaing. Now I drive by her house and don't nail it or rev it up. Too me it seems like everything worked out. SHe got mad, I had my fun.