Wow! 55 dB isn't a whole lot, but its supposed to be measured from your neighbors yard!
You might also be able to figure your actions as "construction", which give you up to 75 dB.
So, what I would do is invest in a cheap dB meter (
http://www.amazon.com/Scosche-SOUNDLEVEL-DECIBEL-READER/dp/B000EOMWD0/ref=pd_bbs_2?ie=UTF8&s=electronics&qid=1209013182&sr=8-2) and have a friend go on a field trip while you're working, say, over to your neighbors fence. Depending on how far away your neighbor is you may be in the clear. If so, you can use your new found data to tell your neighbor to pound sand. If not, you can use the new data to base your work schedule on the ordinance, and
then tell your neighbor to pound sand. You can use the dB readings and the chart to figure out what that schedule is. Obviously, its better to be reasonable and work something out, but I think you've already demonstrated that this isn't likely if you plan to actually keep working on your car. And if you're working on your car during normal business hours and knock off before 5 pm you're probably already being much nicer than you have to be; I think its your neighbor that isn't being reasonable. After all, it would seem that you might be able to grind on your car for a half an hour straight every hour from 7am to 10 pm, which I'm sure your neighbor would just love!
Maybe my take on this is a touch harsh, but when you said "home school teacher"
and "million dollar neighborhood"
I figured your chances of pleasing your neighbor at about zilch.
The only thing likely to make this woman happy is her own sense of superiority, which I'm sure your 'cuda does little to reinforce...
Take some readings, stay within the ordinance as much as you can, and you'll be finished with this part of your resto sooner than enforcement is likely to do much.