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Then this is not fixable, and it is as well a great tragedy.
I would sit quietly with father and explain exactly what could happen with a mentally ill woman who has hallucinations that cannot be controlled, in charge of his well being when he is incompetent and helpless.
If this doesn't cause your father to change his POA, then NOTHING WILL and I would step away from ALL OF THIS at once.
When your father IS incompetent, if your sister is still living, the I would consider applying to be your father's conservator or guardian for his protection.
You might consider an hour of time with an elder law attorney for any options. But with the mentally ill, there are very few other than these brief "holds" which do nothing. People who are mentally ill with hallucination may get medicated in care, and more stable, but they seldom do remain on their medications when released. Many admit that they prefer their delusions to real life.
I suggest Liz Scheier's great memoir, Never Simple about her attempts to intervene and help care for her mentally ill mother, over decades and with the help of city/state of New York, ALL TO NO AVAIL and the near ruination of her life.
Not everything can be fixed.
Has she ever shown anyone the PoA paperwork? You could take the emails and video evidence and work with an elder law attorney to send her a letter demanding proof of PoA. If she doesnt comply or come up with it then you now have a legal inroad. But you will have legal costs if it goes to court for guardianship.
Your sister sounds like a vindictive person.
Is there anyone else who could act as a mediator for your family and convince your dad that your sister shouldn’t be his PoA?