I have also been in a situation where my dogs killed a cat. It was a beautiful grey and white female, who I begged my neighbors to keep inside. She had no fear of anything, and would walk right up to people, dogs, whatever. She came under our gate over 10 years ago, and spat at one of our dogs who had come over to sniff her. The first dog reacted, and the second dog ran over to help. They had that poor cat strung up between them like a tug toy, and she lived about 10 seconds after we were able to get both the dogs off her. She died under our pool deck, no doubt in tremendous pain.
To add insult to injury, the neighbors couldn't even bury their cat. She had to be taken and have her head chopped off to test for rabies, since she chomped down on my forearm during the fracas. Their daughter was distraught, and sobingly asked her mom if they could sue us for their cat coming in our yard and getting itself killed.
You know, I would feel much better about this whole thing if even one indoor/outdoor cat owner would say "Yes, my cat(s) has caused damage to somebody's property one time. I rectified the situation by paying for the damage in full and keeping the animal in question contained after that." That shows more responsibility to me than someone who insists there has never once been a problem, that it does not happen, no way no how. Because if I was your neighbor, you might not know that I have a problem with your cat showing up outside my window and pissing off my dogs. I'm not going to catch the cat and read its tags (or take it to be scanned for a chip since I haven't seen a loose cat yet with tags). Your cat just wouldn't come home one day.
You know, I'm wondering if homeowners' insurance covers damages caused by roaming kittehs. I mean the cat owner's homeowners insurance. It'd be interesting to know if a disgruntled neighbor has ever tried to file a claim on things like that.
RIP to all the past and future mangled, disemboweled, shredded, squashed kitties whose owner thought it would be cruel to keep them inside. Let them take comfort in the fact that they've scratched my car paint, opened my trash bags, pooped in my sandbox, pissed off my dogs, and otherwise made a general nuisance of themselves before they went. Of course, in most cases, their owner had no clue what they did, just went on believing that because they didn't see it, and nobody told them about it, that it didn't happen. Peh.