Boy oh boy, that is a tough one, and you and your family are to be commended for trying to seek a solution. I think if I was in that situation, I would first put my father in an assisted care facility near one of the "kids" ( not necessarily close to the mother ). She for the time being could stay at her house. That way he is in a safe, controlled environment, and she can gradually start to function ( deal ) without him being there. It may sound cold, but hopefully she will become somewhat emotionally less attached to him, and concentrate on herself more. Then if/when she needs assisted care, place her somewhere away from him, closer to another of the "kids". With phone Companies offering flat-rate, unlimited calling, they could keep in steady touch with each other to make the suppuration easy on them. With constant re-enforcement from the "kids" ( "gee mom,dads, doing great"; "mom, I think you're doing great without having to worry/keep an eye on dad every day"...), and MAYBE family get-togethers now n then for holidays/birthdays ( not real sure about this, though ).
I makes me think of the very recent news that retired Supreme Justice Sandra Day O'Conner's husband, in advanced Alzheimer's, in an assisted care facility, has "fallen in love" with another patient, the two of them holding hands, and so on. He's forgotten about Sandra, and it seems like she is taking it real well, happy that at least her husband is as happy as can be be. She doesn't take it as a personal insult, after all, her husband has no memory of her.
Good luck on a very tough situation!! At least you can honestly appraise each of them, their traits and needs, and try to sort out what is best for each.
Mark