Does this sound like Alzheimer's / Dementia or anxiety & depression?

My 86 year old grandmother that I live with had an "episode" in May of last year after reading and seeing news about the disaster in Japan after the tsunami and nuclear plant explosion. (She has been an activist against nuclear power all her life so this was a real issue for her.) She started talking strangely and relating tv shows and other things to Bible events. She was unable to sleep and was reading her Bible and other religious books all night, writing stuff down on paper that didn't make sense and shouting out religious things. When I took her to the ER, she was so agitated that several nurses had to hold her down to sedate her. She had never acted like that before. After a week in the hospital and being on Haldol she seemed to calm down. When she got home, I stopped the Haldol because she got the head and hand shakes (tardive diskenesia). She seemed to be ok and much calmer like herself for the next couple of months. During the past year and a half, we have had 5 deaths in the family and she had a disagreement with her son that led to him not contacting us over the holidays. (He lives 5 hours away). Well, she just had another episode last month. She was crying, wondering why her children wouldn't contact her. She felt guilty for not accepting her son's invitation to pick her up to visit his home. (She doesn't drive and doesn't like to travel) She couldn't sleep and was reading books at night again. She started talking strangely again. I took her to the ER and she was again hospitalized for a week. She was very agitated and talked about me like I was still a baby. (I'm 37) This time other meds were tried and they put her on Seroquel 12.5 mg to help her sleep. I worry about this med because it also has warnings about use in the elderly. I am concerned that her doctor wants her to stay on this med indefinitely and her next dr. visit is months away. So far she has calmed down, and is talking more like herself. She can cook, sponge bathe, go to the bathroom, and other things on her own, but needs help dressing. She likes to read and can pay her bills and manage a checkbook. However, she can get a little irritable to me when she thinks I am watching over her and hates when I ask if she is ok. I have my own case of anxiety so it is very stressful for me to think she may have a side effect or a bad reaction to the new meds. She also has congestive heart failure and high blood pressure. Does this sound temporary or like early alzheimer's & dementia? Should she stay on the Seroquel since its a very low dose or try withdrawing to see if she can sleep without it? I have heard this med has bad withdrawals. She has had many tests and has not been diagnosed with alzheimer's or dementia. Any help is appreciated.

My grandma has had CT scan, mri, blood tests, lumbar puncture etc. No evidence of stroke or blood clot or tumor. She seems to be doing ok now on her medications, but has some irritability and constipation. She has congestive heart failure and high blood pressure.
She is talking more like herself. I wonder if she will have to be on the Seroquel long term.

Great suggestions Smurfy!