Dino,
What a horribly stressful and worrying situation for you. It is truly bizarre that SS refused to provide any night time support for your father and only offered support for 7 hours a week, whilst they clearly acknowledged his need for a much greater level of support when they suggested that he needs 24/7 care in a care home - talk about one extreme to the other!
From what you've posted it's clear your father is in a pattern of 'sundowning' and that alone makes it unsafe for him to be without care during the night. I was in a similar position with my father just over a year ago, when Dad started roaming around at night and sleeping during the day, which meant he was missing out on the carer's visits/drinks/meals etc and was on a slippery slope downhill. His dementia test score was around 22/30 so similar to your father, but he also had very poor mobility and some other health problems. After a nasty fall on the stairs he ended up in hospital and while he was there I looked around at care homes and was lucky to find one that was ideal. I persuaded Dad to move there for a trial period, which then became permanent.
One of the things that made the transition easier was the fact that I got him one of the best rooms which had an en suite toilet and a door going out into the (secure) garden. The room cost a bit more but as he had enough savings to cover it for a year or so I didn't think further ahead than that. Social services started to get involved but quickly withdrew once they found he had savings and would be 'self funding'. However, when I suggested to the SW that I would apply for funding once Dad's savings dropped below the threshold (£23K), he very quickly replied that I may not get funding, as they might decide he could return home with 4 calls a day to support him! (Apparently, it is common for them to offer just 4 x 15 minute calls a day to elderly people.)
Time rolled on and Dad settled well into the home, but he still misses his freedom a bit and occasionally tries to 'escape'. He enjoyed the garden views in summer but the downside was that the carers kept pinning the door open in warm weather to air the room - Dad hated that as he sees all fresh air as a draught! Eventually his savings dropped and I applied for funding. Around that time a cheaper room became available, not facing the garden, so we moved Dad there as Mum could not afford to pay the top up that would be required for a view that he no longer cared about. The LA/council tried various tactics to limit their funding to their usual cap, including trying to get us to move Dad to a room with no en suite WC, suggesting he could use a commode instead. However, I knew my father would find that intolerable, so I stuck to my guns and achieved the full amount needed.
The council had a favourite mantra they liked to quote: 'Our cap is £x and any costs above that are the responsibility of the family to pay.' However, I had read up everything I could about funding, and argued every point with them, because my mother's pension is so low there is now way she could afford top up fees.
So, in your position I would definitely go with your gut instinct and try to find a place which you can picture your father settling into, and if that means a nice view and an en suite WC then go for it, because the extra money could be money well spent if he settles there and enjoys a couple of good years there. Sadly, once things progress to the severe stage, your father may need to go into a nursing home anyway, but with dementia you just can't plan very far ahead so there's no point in dwelling on that.
The SW had no business making the remark about the room being too expensive if it will be funded from your father's assets, but it's true that some people live 10 or 15 years with dementia, so they were just looking ahead to the possible costs to them once assets drop below £23K and he becomes eligible for LA funding. At that point they might try to move him somewhere cheaper, as their funds are very stretched and they have a duty to spend public money wisely. However, your duty is to get the best care you can for your father, so be aware that you may need to go into battle on funding if/when the time comes.
Meanwhile, I think your best bet is to ask SS for (another?) full assessment of your father's needs and ask them to provide a list of suitable homes which meet those needs, for you to view. Tell them the matter is urgent and that you can't continue to take the financial burden of his night time care package. Also, I'd suggest you explain that you need urgent respite care as the care duties are affecting your health. I have found carersuk.org a very useful website - take a look at the forum where you will find lots of good advice.