As much fun as it would be to get "even" and make their life miserable.....I don't think it is the right thing to do. You obviously are a better person and you should not be dragged down to their level. Do what it takes to secure your property and make it clear that they are not welcome to take your property....but avoid the temptation to harrass them. I really think that putting smoke bombs in the wood will only make the hostility worse and they will then have a need to get back at you even more. It may also be that getting the Police involved and proving that they are stealing may end up with the same result......although catching them in the act would certainly be rewarding. As the above post mentions....the theft of some firewood is probably a misdemeaner and would carry very little penatly to your neighbor. (I don't approve of any stealing.....I am just not sure how getting your neighbors to have a criminal record will help them get along with you any better).
I work for a small city as their Engineer/Zoning Administrator/Building Inspector and I have seen neighbor disputes and been dragged into a few when they want the City to pick a side. I am also a licensed land surveyor and have knowledge about right of ways/easements/alleys. If the alley is a dedicated right of way that is recorded on a plat at the County Clerks' Office, the only way it can be vacated is by a legal action by the City - it does not cease to exist because of non-use or someone putting up a fence. If the alley is a not recorded or dedicated to the City - it can cease to exist because of non-use. If you have continued to use a portion of it you may have the right to continue use of the alley. Easements can exist through dedication - or by a "prescriptive use".....which means that if you have used the alley without restriction for an extended period of time you may have the right to continue to use the alley. The length of time required for a prescriptive easement varies from state to state.....in Kentucky it is 17 years. If the alley is a dedicated right of way or easement it should only be necessary for you (or your surveyor) to produce a copy of document that dedicates or records the easement - and to research the records to see if the alley has been vacated/abandoned. If the alley is not dedicated and the neighbors block your access - you will probably have to go to court and have a Judge rule on the status of the alley and your right to use it. You should seek the advice of an attorney about what to do about the chain the neighor installed, as allowing them to block your access and doing nothing could be an aknowledgement that you are giving up your right to access the alley.
I don't see any problem with the alley not being paved and you driving on grass occasionally as long as you are not tearing up or damaging the yard - and I doubt that your city would have any ordinance that would prohibit you from driving in a grass area occasionally when moving firewood, doing yard work, building a fence, etc. All the ordinances that I have seen on this subject require permanent parking and driveway areas to be paved and they prohibit you from continually parking in your unpaved yard - but the ordinances are never used to prevent someone from parking cars in the grass when you have company during a birthday party, Super Bowl party, Mother's Day, Thanksgiving, etc.
I am blessed with wonderful neighbors and we all get along great and help each other whenever we can.......I really am sorry that you are unfortunate to get some that are worthless. Getting your property secure and putting up the fence may be the only resolution to this problem.....until they move.