Will lye damage vinyl pool liners?
Lye (Sodium Hydroxide) is sometimes added to pool water to bring about increase in pH, without making significant increases to total alkalinity. It will bring about quite rapid changes in pH. I assume the intention is to bring the overall pH back within a sensible range of 7.4-7.6.

Adding high concentrations of sodium hydroxide (liquid lye is about 50% in water) might degrade the vinyl over long periods, but so too will high levels of acid, bleach, exposure to sun, and just about every other chemical used in pools. Vinyl liner can be damaged by low pH (below 7.0), but there will be other symptoms of high pH (above 7.8) (cloudiness, calcification, precipitation) long before damage to the vinyl liner kicks in, I think.

I think the nutty neighbour may be not too far from the mark to say "only use a little bit". All things in moderation.