I believe this is the hardest time of dementia, the coming and going of in and out of reality. In this stage I think there are a few things you can do to help her. Validate her 'fear' and confusion by saying "Mom, I know this is a confusing time, but I am here to help you." (She will 'hear' more than your words when you provide empathy). I have often found most folks experiencing dementia feed off the emotions and non-verbal cues of those around them. So being confident in what you say and how you say it without being condescending will validate her beyond belief! She will trust you and follow your lead. She still WANTS to be your parent so providing her tasks she is capable of doing to keep her busy. I worked with one daughter who did her mom's laundry (the buttons were confusing) and left the multiple baskets available to be folded (a job her mother enjoyed).
The second thing I would suggest is begin doing your homework on alternate options in and out of the home. I believe a Senior Living Advisor from A Place for Mom would be beneficial to understand what may be available now, in the future and costs associated with care. As I have told others, I believe in what A Place for Mom does and refer families to them often (another reason I contribute to their forums, they are doing good things for families). They will at least help you lay some groundwork to be prepared.
I have a passion for helping families with dementia and given the right tools and resources the journey can be one of memories and love.
Here are a few links you may find helpful:http://www.alzwell.com/validation.html
The website www.alzheimers.net
has chalk full of resources, particularly this piece: http://www.alzheimers.net/caring-for-someone-with-dementia/