I won't second guess the actions of a cacher that is "on the spot" in such a situation. You now what was happening there/then and used your best judgment. Having pulled the cache,and having an irate neighbor, whether right or wrong, I think you played it right. The cache owner didn't respond so the Needs Archive log is a good call. Just because you post that type of log does not mean that it will be archived immediately. The reviewer will get the notice that a problem exists and handle it from there. I think that log type needs to be renamed to something a bit less intimidating. Perhaps "Notify Groundspeak" or "Alert Reviewer" would be less problematic?
To the side topic - As I understand it the forced adoptions ended due to legal questions involving ownership. By letting cachers adopt a cache without prior owners consent Groundspeak was usurping the original owners rights. Another argument could be made that by transferring ownership of a cache Grounspeak is asserting that they have some rights to the title so to speak. If that was the case then they possibly could be held liable for any consequences arising from a cache placement. Easier to maintain a legal buffer if they say we don't own it so we can't transfer that ownership.