I was typing you should change your route while you work on this, but then I saw your last sentence.
I'm all for a balanced approach in training, and I'm all for corrections when needed, but in the case of reactive dogs I think popping them with the prong might only exacerbate the situation.
How is he with NILIF? better yet, how are YOU with NILIF? I would suggest starting with that while you work on this issue.
As far as the reactive / aggressive behavior. It could be so many different things. Maybe he just doesn't like the dog. How is he with other dogs? With that said, it's no excuse for him to bark and lunge unprovoked or play barrier wars with another dog on the other side of the fence. I would watch him closely when you approach the house and redirect any posturing, staring, stalking, hackles up, etc the instant you notice it. I would not continue walking forward until you have the dog's attention and then reward any attention towards you immediately. Hey, if it works for you you can even grab a string cheese and just feed him as you walk by the fence. You can show him a ball if he likes it and reward him focusing on you rather than the dog on the other side.
The heel doesn't work because he hasn't been proofed in that scenario. You need to proof a heel command in a controlled environment with a dog he's neutral to and then SLOWLY move closer to walking past this house.
Generally, I wouldn't correct here because it sounds like the dog hasn't been proofed enough on heeling and that can only lead to confusion. Of course, once you show him what you DO want him to do in this situation (by redirecting and rewarding) you can correct him disobeying with a NO and a collar correction (no tension, just a quick sharp pop on the prong) and then reward him "snapping out" of that fixed state of mind and focusing back on you.
Hope this helps, others feel free to chime in.
Oh yea, and the best thing you can do is find a trainer / behaviorist in your area if your circumstances allow it.