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I should call the psychiatric team and see if they can have another go at getting your mother better stabilised.
Meanwhile, rather than giving your father a concrete no about the going home point, instead ask him to give the facility time to get past the teething troubles, and reassure him that this will be the best option for both of them in the long run.
Is there any possibility of their "living together apart"? The ideal might be if your father can reside in the ALF section and visit your mother daily in the memory care unit, but also be able to get away and leave her in safe hands when she becomes argumentative or distressed.
You absolutely have done the right thing, by the way. I hope things will begin to run more smoothly for you all very soon.
I'd work towards protecting both parents, but, it might not be possible to meet their goals. I'd focus on protecting dad's state of mind and safety, as well as that of your mother. If they were both really thinking clearly, they would not surely not want to hurt the other or the staff. Nor would they want to cause you, their precious child, worry and pain. Based on what I have observed, having a person who does not have dementia, living in a facility with a person is severely affected and agitated, is concerning. I would strongly discuss how negatively this can affect your dad. The other person ends up trying to take care of the other one and this is a full time job. It's just too much. I can understand how your dad may be exhausted and exasperated.
For me, the guilt would be if I chose to allow my parents to be in a situation where they were not protected and cared for. I hope you can find some answers that work for you and that you can find some peace.