Re: Advice about illegal fireworks
Hey neighbor!
If you think those rockets are big, you should see what I used to set off for the 4th when I was in the marines. Can't do that stuff in a residential neighborhood

At least not since "the incident."

(kidding)
By the way, by rockets I assume you mean aerial shells, since you said they looked like they were "commercial grade" (which by that I also assume you mean professional grade, since commercial grade is used for demolition or mining, not displays), and because no professional displays use bottle-rocket type pyrotechnics. It's pretty easy to tell if they are professional grade by the way. Professional grade aerial shells will be about a foot in diameter (9" minimum, but usually 12") or larger, whereas commonly available fireworks can be up to about 4 inches in diameter. So if he's not loading bowling ball sized fireworks into a gigantic launch tube, they are probably just the common commercial fireworks.
More commonly people will buy those large bricks that have many small aerial shots in them. They may contain up to 500 grams of explosives without being tracked or regulated on the consumer end (more than 500 grams and you must be liscensed to purchase them).
If he's really got larger than commonly available fireworks, then you should report it to the ATF, who will most likely ignore it, or maybe write him a citation if you're lucky. But I really think you're just letting your fears get the best of you.
By the way, where in the country did you say you live? Because I live in the southeast, and even though we're in one of the worst droughts, this has been a VERY wet month for the southeast, which means there really isn't an extra fire hazard, because quite frankly, I've never seen a fire start because an aquafer was 12" lower than normal. The only thing that counts is the top centimeter of ground. If that's wet, damp, or even slightly moist, that's the only thing that matters. If that's dry, AND there's plenty of fuel (leaves, wood, etc), THEN you've got a fire hazard.
PS - I've started 3 fires in my life, and all three were while cooking, so maybe cooking should be banned... OR we could just keep a fire extinguisher or hose handy.
PPS - I don't shoot on new years, only the 4th. Celebrating with fireworks on new years makes about as much sense to me as hiding easter eggs for Christmas.
PPPS - Sorry if I don't sound sympathetic to your cause, I assure you it's only because I'm not sympathetic to your cause. I mean seriously, half the problems with this world are due to neighbors not talking to each other. I'll bet you've never once invited them over, or had dinner together. You wouldn't even be asking about this if you had, because if you had, you'd be able to ask your neighbor friend to friend to shoot them off elsewhere away from your house, and it would be no big deal.
Ok, I'm stepping DOWN off my soapbox now.