Sitting on the pot for 1-2 hrs. Any ideas why?

Not a doctor here but...some ideas.
Are you sure she is not constipated or "blocked" a bit?
You can still have a BM but retain stool that will become more and more difficult to evacuate.
With dementia some of the "cues" we normally use to tell our brain that we are done are diminished so she may feel that she still has to go.
If you can redirect after the first BM and get her dressed and into the kitchen for a bit of breakfast that might help get her mind of trying to go again. After a bite to eat she can try again if she wishes but I think if you keep her occupied she might wait a bit longer.
An increase of fiber and fluids might help if she is a bit constipated.

We on the forum would have no idea what medical reasons would be at play to make your loved one go back and forth to the toilet for hours on end. You can follow the doctor's advice and take her to the ER for an evaluation and so some tests can be run to see what's going on, but unless there is an illness lurking, I doubt they'd have an answer. Dementia can certainly cause an elder to act in many odd ways, including obsessive/compulsive behaviors with the toilet bowl. If you notice that she is only acting this way when she gets up late in the morning, I suggest you get her up earlier and maybe it won't happen. Dementia changes SO often that it can be impossible to figure out what's going on in any given moment, honestly.

My mother had dementia for about 6 years; she also had a lot of OCD issues pertaining to BMs and the toilet in general. I often said, if it wasn't for having to use it, she'd have hardly any issues at ALL! :( She was either falling off the toilet onto the floor, having to use it constantly or not at all due to constipation or diarrhea, having blow outs that required huge clean up efforts, asking for laxatives to help her & then having issues stemming from that, and on and ON. I think mom spent more time on the bowl than she did in her bed!

You can rarely rely on a doctor to give you straightforward answers when it comes to dementia related behaviors b/c they don't understand them EITHER! The human brain is something we're still in the Dark Ages about, truthfully. You are the one who is best equipped to figure out your loved one by using trial and error methods. Try this, if it doesn't work, try that. Which may sound stupid, but it's your best bet since there are no foolproof answers when it comes to 'how to treat dementia'. Put a pull up brief on the woman after she has a BM so that if another is coming right away, the brief will catch it. It's worth a try.

Good luck!