I actually got into this argument at home because this came up. I knew that reaction cards are played first before resolving the rest of the effect being reacted to. I had a hard time sifting through all of the rules, but a friend found it before me. I believe it's actually listed under the description for Moat. Donald had much of this game planned out already, so many of these rules take into consideration future cards (such as attack cards that give a choice).
So, check that rule book and reread Moat, I believe. I'm going off of memory, and it may be faulty. I hope not.
And I'll ditto people who say that Pirate Ship is not extremely powerful. I will tack on a caveat that in some situations, it's a must-have, but it generally is not that necessary and can sometimes actually help your opponents than it helps you.