I've got a 20 month old dog that's working towards his Sch1, has good prey drive, and did want to chase our 2 cats - desperately - when he was a younger pup. Now he has absolutely no problems with them. He sees them as small dogs, I think...he keeps dropping his ball/tug etc in front of them, trying to tempt them to play. After doing this for the last year, you'd think he'd get the idea that they're not interested.
All we did was work very carefully to convince him that a) the cat's aren't toys. Nor are the deer, rabbit etc we always get in our yard. The only things he's allowed to direct his prey drive on are his toys, and only when we're playing with him actively. He's not allowed to get into prey drive on his own - if we see him trying to "self satisfy", we take away the item he's chosen as his new toy. It sounds a little cold, but if you want to do schutzhund it makes a big difference....and he gets lots of play time (as well as other exercise) with us each day, so he's by no means deprived.
It can be done, it's all in how you do it. At first, we just corrected him for any attempt to chase or otherwise interact with the cats (just a verbal correction for us, he was easy to teach this way). Once he was VERY clear that the cats were something he had to "***** foot around" (pun intended), we allowed him to sniff at them very gently, but not follow them around the house. Now we're comfortable enough that he can run up to them, drop a ball, and sit there looking like an idiot while he ignores them. He doesn't attempt to chase them (nor do they run from him like they used to), but if he did, that's be absolutely NOT COOL, and he knows it. We don't have to remind him often, but we've tried to always be clear, so that helps, I think.