Parenting Other People's Children

This one is always sticky.

We have a neighbor girl (let's call her Jill) who was in Boy Two's kindergarten class last year.  Jill lives across the street and is the only child living at her house full-time so she is often bored and in need of other children with whom to play.  By default, my children have become her playmates of choice.

Because our little townhouse doesn't really have a back yard to play in, we spend most of our outside time in the common driveway and minimal surrounding landscape shared by our subdivision.  Thus as soon as we exit the house, neighbor Jill sees us and clamors for our attention.  My children (for the most part) love to play with other children and are flattered that others want to play with them, but tend to end up disappointed with the progression of the playtime.

For example:

• Jill will invite Boy Two and (occasionally) Girl over to her house to play in the yard, but she never invites Boy One (whose feelings are characteristically hurt by this).
• Jill will insist on playing with the majority of Boy Two's horses herself, but refuses to even let him touch the 'special' horses that she brings over.  Her rules for playing with her personal belongings are numerous and convoluted, subject to change without notice.
• When Boy Two is excited he tends to stutter quite a bit, as he has so much that he wants to share so quickly.  Jill has taken to mocking his stuttering when she comes over.  He either doesn't notice or doesn't know what to do about it, but I have to restrain myself from being mean back to her.
• Jill brings her own bike over, but will ride the boys' bikes whenever she feels like it.  When Boy One asked with mild protest why she was riding his bike and not her own, she flippantly retorted "Because I felt like it."  My kids have been trained to ask before they borrow, and this behavior shocked them all.
• When Boy Two excitedly asked Jill if she wanted to know what he named his toy horse, Jill indifferently replied "Something dumb I'll bet."  I find it hard not to glare at her.
• When Jill asked Girl if she could undo the carefully plaited braid that I had made in her dolly's hair, Girl said no but Jill did it anyway.  Then, when she couldn't make the dolly's hair do what she wanted, Jill took out her impatience and annoyance on Girl, as if it were her fault.  It was easy to see that this kind of scene had been played out in Jill's house often as she parodied her parents.
• Jill refuses to take turns when playing games like Hide and Seek with my kids and often changes the rules to suit herself or just stops playing when she gets bored, which is often.  I know this is typical child behavior, but that doesn't make me like it.

I finally claimed the last straw the other day when Jill asked Girl to bring her certain tools from the garage.  I quietly reminded Girl in Jill's hearing that Mama's rules specifically forbid her from getting those tools.  Jill waited a minute, and then again asked Girl to bring her the tools, and Girl (ever wanting to be helpful) went off to the garage to find them. 

At this point I began picking up our things and told the children it was time to go inside.  Jill asked why, and I crouched beside her and told her that she was not being respectful of me and my rules by asking my children to undermine me, that it hurt my feelings, and that when she behaves like this it makes me not want to let her come over anymore.  I chose my words very carefully without any malicious undertones, but I could tell that she really took them to heart.  I helped her carry her toys back home and cheerfully thanked her for playing with us, all the while she remained quiet and pensive.

I greatly abhor reprimanding other people's children for behavior that I feel they should know better then to exhibit. 

I obviously understand that all children have the tendency to want to manipulate circumstances towards their own best interest.  I know that the heart is deceitful and desperately wicked.  I know that selfishness, self-absorption, self-satisfaction, self-promotion is the natural tendency of the human condition and is displayed by every human being ever conceived.  I know that God alone changes the human heart.

But I don't know what to do about other people's children.  How much should I protect my kids from the nasty behavior of other kids?  Should I refuse to let them play with all but the most perfect of children? 

Thus far I find it most affective to talk with my children about the behavior of other kids that my children did not like.  They admit that it doesn't make them feel good when others don't share their toys.  Or when kids change rules for games or not take turns.  Or when they say things that aren't kind.  This seems to be fairly effective, but I want so much to do more.

I can't protect them, but what is the best way to guide them?  To help them learn to make wise choices and not be swayed by the poor choices of their peers?

I hate this part of parenting.