Disorientation mostly in the morning, but sometimes throughout day is main symptom. Anyone experience this?

I would suggest that if she feels like she's going crazy, she may be very disturbed by it. I might try to provide more comfort and support. I know that my LO felt very strange when her dementia progressed. She would report feeling strange, like she was in a dream. She would ask me if things were real. She would often think that she was at a mall she used to shop at, that doesn't really exist anymore. It scared her though and she needed a lot of comfort, visits, etc. Soon, it was clear that she would not be able to live alone though. I'd consider some options. Delusions can cause the person to place themselves at risk, as well. I'd be concerned that if she became disoriented enough or scared, that she might call 911 for help and then they would wonder why she's living by herself.

Sometimes they don't recover from the last hospitalization, mentally, the way they have in the past. Each event they suffer brings them down another notch, especially with dementia, which can worsen overnight with hospitalization. The confusion your mother is experiencing is typical with dementia and the disorientation that comes from change in general. They have trouble with change, and it affects their mental status quite a bit. I don't think doctors truly understand the depths of dementia, as the brain is still a big mystery, you know? My mother had pneumonia and suffered from delirium in the hospital...........I've never seen anything like it in my life. She did get a touch better in rehab, but wound up taking another step down overall which made it necessary to go into memory care from the assisted living facility she was living in for 4 years. I hear you say your mom is 'not in danger' at home making her own meals, but that can change quickly and without notice. Dementia is very, very tricky, so beware, and have a Plan B in force for when the time comes. You may want to look into home care as an option, ie: sending a caregiver into her home for X amount of time per week to help her with cooking, cleaning, laundry, and chores of everyday life.
Best of luck!