My husband wants to go to bed at 7:30 pm. He has dementia and wakes anyway from 12 to 2am with restlessness and hyperventilating. I push him to stay up til 9, but he gets very agitated.

First you really can't take too much melatonin, as what your body doesn't need it will just discard the rest. And if it helped him sleep better, that's great. What better than to take a natural supplement than having for him to take drugs right?
You can also get extended release melatonin that will last longer throughout the night. Otherwise you can cut the 10 mg one in half, and when he wakes back up you can give him the second half.
And yes, I would just let him go to bed when he wants to. That will make your life much easier in the long run.
You have to learn to choose your battles wisely and I'm not sure this battle is worth fighting.

Always ask your doctor before giving additional medication - they can have an effect on the patient with other meds that are being taken. Ask the doctor if you give him a half the melatonin when he wakes in the middle of the night - tell your husband its medication from the doctor or what ever you can to get him to take it. But always ask your doctor first.

Cruiseforever, check his regular medicines and see which ones have a side effect of making one sleepy. A lot depends on what time of time that med is taken.

I know for myself, if I take an antihistamine just before eating lunch, it can zone me out. But if I take it right after breakfast, no problem. Also, I take my blood pressure pills later in the evening, otherwise they would make me feel tired.

Another thing, a heavy meal for supper can make some people feel very sleepy. Try having the heavy meal at lunch, and a light supper. If your husband dozes off right after lunch, chances are he will be fully awake later in the afternoon and into the evening.

Did you talk to his doctor about his symptoms?

The only thing that helped my mom sleep at night was Ativan and Seroquel.

Best wishes to you and your husband.