I'd buy the guy a beer and apologize for intruding in his space uninvited and explain what I was doing and that I wasnt snooping or spying. If I'd done the latter part of this response BEFORE flying over his property, the drone would never have beem shot (either the guy would have approved, or I would have avoided his property knowing his objection). I'd inquire whether, once I replaced it, he'd like to come fly it with me and whether he continues to object to my flying over his property.
It amazes me how little courtesy we have for our neighbors (both formal definition and global definition). We have become a totally "me" culture ready at once to defend "my" right to fly wherever the hell I want and ignore the next person's right to private enjoyment of their property. Could the guy have warned the pilot in some way, yes, and I think that would have been the better course than shooting it - so I'm not condoning the shoot first approach. I am saying, though, that were I piloting that craft I would accept responsibility.
None of the above touches on the legality or illegality of shooting in town or FAA regs or anything else. My comments are purely on my personal response to the question based on my own ethics and morals. In short, if I fly where I don't have permission then I take (and accept) the risk of someone believing their rights are endangered and taking action to protect them. If I don't want that risk, then I get permission or fly somewhere else. It is called personal responsibility and accountability. The same is true, by the way, were I the shooter. If I were to shoot down a drone over my property then I'd be subject to whatever laws were on the books in that area.