The "35 minutes twice a week" thing is real. My buddy did almost the same switch last year after his lawn looked awful all summer. He was doing the quick nightly sprinkle too and could not figure out why it kept dying on him. Once he went to deep soakings a couple times a week, the grass came back way thicker and his crabgrass problem even eased up some. Shallow watering just trains the roots to sit right at the surface where the sun bakes them dry. Your neighbor's water bill dropping makes sense too, since he is not running the sprinkler every single day anymore.