How do you deal with magical thinking?

My 87-year-old mother has been in an assisted-living facility for three years. Recently, she fell and put a small fracture in her left arm. The extra care she needs caused the staff nurse to insist that we bring in a live-in caregiver, which costs $280 a day, while her arm heals. Mom started talking about wanting to move in with me to save our inheritance. I have a small, one-bedroom townhouse and I'm out ten hours per day because of my job. Mom thinks that if she moves back into a regular home environment, she will somehow revert back to being fully independent, preparing nutritious meals for me, doing light housekeeping, taking care of the cat, etc. I'm wondering if this crazy thinking is a side effect of the Norco she's taking--or some kind of weird dementia.