Play the same game. "I was concerned this woman was talking to my son, I couldn't hear her but the conversation seemed to be something about how she wanted him to come over to her house and how handsome he is, and then when I came into her eyeline she suddenly started ranting about helmets and CPS. I'm really confused about the whole thing officer, I assume she is just elderly but can you ask her to not talk to my son further?"

I'm sorry, are we honestly entertaining this idea? I try to write measured, patient replies on this site, but holy crap, it's hard sometimes.

Think about what you're proposing. You want me to drag my son, a kid who was little enough back then to still ride a bike with training wheels, into a tense argument between a weird lady, some scary-looking adults, and his parents who suddenly decided to lie through their teeth for some reason? Aside from what example I would be setting for him, how do you think a kid would handle a situation like that?

It wasn't enough that this lady already pissed on his parade, I'm supposed to compound it and put us all at risk of having him taken away because we were "negligent" and also falsely accused someone of being a pedo?

Have we forgotten that the #1 priority in this whole situation is the kid, not our pride or out desire to put someone in their place?

Nope it goes like this. Weird stranger wants to parent your kid, tell her to pound sand. They call the cops and portray you in the worst light possible, making thinly veiled insinuations that you are not providing a safe environment for your child.

You don't know this person. A little old lady is unlikely to be a child molester statistically but it has happened. So when the cops knock on your door, maybe that's the concern that leaps to the front of your mind. Don't accuse anyone of anything just mention details, for example perhaps she touched him on the stomach to stop him "she placed her hand near his penis". Get creative. "Obviously a sensitive topic like this can't be discussed in earshot of the child victim".

You may say "I want to do the right thing" and that's fine, but personally I want the right thing to happen (ie. Kids being allowed to play outside) and I'm willing to bend the rules in the very same way that the people trying to prevent that are.

Yeah society is horrible and narcissistic, so lets just make it all worse.

I want to be dead honest with you: The Internet is full of "I would have said X" situations where everyone acts like X is this big gotcha. It will make you outraged, but these people are all paper tigers. Drop the argument. Walk away. Your life will be better for it. Their advice is worth nothing.