Output power is a setting in your wireless driver. Just set it to whatever is appropriate. (Getting your neighbor onboard is probably the bigger challenge.) Getting the power just right is a big part of planning large scale wifi installations. You could also put dampening (basically a resistor-like thing) in line with your antenna.

There's been several proposals how to do this automatically, which would do a lot for the congestion problem you mention, for the IEEE standardization process. But I have no idea if they made it into the newer standards. Unless you actively cooperate with your neighbors, it turns into a tragedy of the commons. The one with the power regulating equipment will have worse performance to start with, but if everyone has it then everyone benefits.

I'm somewhat concerned about LoRa and things like it for that reason. Having a transmitter emitting energy in your band is bad. But having a bunch of transmitters emitting coherent energy you're receiver can detect it worse. The former just cuts down your signal to noise. The latter directly limits your available bandwidth. Which is to say, if your radio detects the beginning of a weak packet from far away it's locked down for the duration. Can't transmit, can't receive another stronger packet that arrives slightly later.

Increasing WiFi range doesn't mean much for most consumers, but it's hugely important for deploying WiFi to large public spaces (city streets, offices, parks, etc.)

(On an unrelated note, the fact that you can see your neighbor's WiFi seems like one of the smallest imaginable hindrances and a terrible reason to reconsider WiFi innovation goals.)