There is a really good chance that she is running an illegal day care center, and even if it is legal, you said yourself that six kids is the limit. Call the cops. Call them every day until something is done. Call your town supervisor's, or mayor's, office.
Since Children are involved, you may be able to make anonymous complaints depending on your local laws.
I agree with everyone else. Call child services and report the illegal day care.
Here are a few revenge tatics to get you started.
Get a super soaker (they shoot about 50 feet) and some roundup. late at night you can streak their lawn or else write dirty words on their front lawn.
Use the same super soaker and fill it with brake fluid. Brake fluid + Super Soaker + car paint = peeling paint.
Head over to the nearest sporting goods store and purchase some skunk oil (hunters use it to cover their scent). Get a hypodermic needle and fill it with the fluid. Spray the play area to make it uninhabitable for the kids.
Let me know if you REALLY want to get serious enough to make them lose their business and move. I'll give you more tips.