As far as I can recall, here in Canada to retaliate is not legal. It boils down to the "two wrongs don't make a right" argument.
From what I remember of reading articles where people where hacked, retribution was not legal. Also, you would need to make certain your target was in fact the real target.
Imagine that I hack your neighbors PC. I then use their PC to discover your WEP network, and I begin cracking your WEP signal to increase my number of compromised targets. You are, in essence, running a honeypot or honeynet in this case. Now, I break your WEP, and you notice that I am in, so you begin counter hacking the PC that I used to compromise your network.
Thing is, the PC I am using belongs to your neighbor, and they never had the intent of attacking you - I did. You have just attacked an innocent victim's PC. It does not matter that I took control of it - we are now both equally guilty of hacking the neighbor in this scenario.