Leaving a man with dementia in an overnight nursing home for a week. Should I, or will it be too traumatic for him?

You should do this as often as the VA will allow. Please don’t fall into the trap of believing you’re the only one that can provide care. It’s vital for you to have breaks and refresh your spirit to continue in such a challenging role

I had to do a one-week respite stay for a client with dementia when her house was undergoing some renovations.
I did not see or talk to her for the entire week and neither did the PM and weekend caregiver. She did just fine in the nursing home. She was fine when she returned to her home and caregivers.
Your FIL will be fine. He will be fine when he comes back too. You're doing him a favor as well as yourselves by placing for a respite stay.
The shadowing routine of you or your husband having to be present with him at all times has to be stopped. That habit must be broken for everyone's sake.
When he returns after the respite stay start sending him to adult day care one or two days a week. Insurance pays for some. These places provide transportation, meals, and supervised activities. Make him go. He will adapt and some socialization will be good for him.
If you have hired homecare aides coming to your house, when they are there you and your husband should not be home during their working hours. Your FIL will adapt.
Your FIL has to be broken out of the shadowing habit before it gets to the point where you and your husband won't even be able to go to the bathroom alone.

YOUR needs are important and you need to recharge periodically if you want to keep you physical and mental health strong enough to continue - it's also a good introduction to life in a care facility for both of you if full time placement is needed in the future.
I will freely admit that my mom's first respite stay was traumatic and her care was less than ideal. Looking at this through hindsight I realize a lot of that was due to the simple fact that no matter how good a facility and how empathetic the staff they simply didn't know mom or her needs. Facility care is not the same as one on one care in the home, it can't be. And if you haven't had a near loved one who has lived in one you can truly feel a culture shock, everything is so foreign. BUT - I still wouldn't hesitate to recommend it to anyone seeking out respite. I think a lot of problems could have been smoothed to a degree if I had known exactly, step by step, what was offered there and exactly what a day looked like🤔 It was only once my mom lived there full time that I realized I had missed out on PT, meal plans, and activities that were available but I didn't know enough to ask about.

Coming back to add - some people have had some success spinning the decision as going to a special hotel for a holiday...

We had to do this for my father. He was allowed respite care at the VA for many weeks. My mother REALLY NEEDED THAT BREAK. My father was fine. He was well taken care. No need to worry. You owe it to yourself.

Brings back memories for me.
I had the chance of a lifetime to take a vacation with an old friend and his lovely wife. I had been caring for my Husband and was getting to the point where I did not know if I could continue. (for my mental health I needed a break and had not been on a 'vacation" in 4 or 5 years)
He had been going to Adult Day Care at the local Memory Care facility and I discussed it with them and they had the room and I made arrangements to leave him there for 3 weeks. (yes I know a long time)
I was worried that......(in order of worry)
That he would die while I was gone.
That he would get sick
That he would not remember me when I got back.
That he would be so "institutionalized" that I would not be able to bring him home successfully.

I did not have to worry. He did well, probably better than I did worrying about him and all the possibilities.

I will tell you one "frightening" thing that did happen.
Keep in mind I was out of the country and had left my sister as emergency contact at the facility in case they had to get in touch with me they would contact her and she could get hold of me. I would also have very limited use of a computer, only if the hotel we happened to be at had one for public use.
I got a call from my Brother in law. Informing me that the facility had contacted my sister, my Husband had an infection and they needed permission to treat it.
Well..obviously I agreed to that (probably should not even have been a phone call to me she could have OK'd the treatment. Well that got me upset....
I get home....
All is well.
He did not die
He did not get "sick" (more on the infection in a moment)
I got him home and he went right to his recliner and sat down!.

going over the paperwork from the facility the "infection" that they contacted me about, the urgent one that needed approval for treatment.....
ATHLETES FOOT!
Just so you do not get a surprise call like that make sure someone is able to approve treatment without disturbing you. Obviously if it is a true emergency that is different. I am sure the VA would be a primary medical contact for you

Enjoy the time away.

It is normal in his condition to feel upset if you leave him in the facility. If his Dementia is very advanced, he won’t remember what he felt yesterday. It will be a new memory each day. Dementia patients will often do well around a lot of people. It gives their mind a new focus. You deserve some time to yourself so that you do not get burned out. He will be in good hands. Once his Dementia gets to a very advanced stage, you may want to/need to put him in a long term facility, or get in-home help.

This is a challenging decision. One way to approach it is to think about how having a bit of breathing space after three continuous years will allow you to be refreshed and ready to start again in the daily full time care.

There are lots of people with all sorts of reasons and issues that find new places and experiences unpleasant at first. You don’t know if he will settle into it after a day or two unless he tries it.

Some people that may know more about the picking up after a week experience are the staff at the facility such as reception and aides.

I think you deserve to have a week to yourself and if he could understand what is going on, I think he would agree. Hope you find the right decision for you. Newdawn

This reminds me sooo much of the questions we asked when our kids were little. I have no real point; mine are grown but barely gone thanks to COVID/jobs. I work 6 days a week, travel 6 hours to help my mom Sundays. I get no relief from a narcissistic spouse who at 61, has more imagined health issues than my 86 year-old wheelchair-bound mom. Take the break!

Since you need the respite, do it. He will be a little disoriented. If he tends to get anxious and agitated easily, ask his doctor for a prescription for a mild anti-anxiety medication.

A person with advance dementia will quickly forget about you. He won't even notice the difference.