IMO it's a nice idea. As others have said, he's showing them Christmas is about family and caring, not just presents and food. Presumably he'll be keeping an eye on them the whole time. They'll get lots of attention from residents and it will be lively and jolly. I've worked in many residential and nursing homes over Xmas. Games, singing, carols, decorations, lovely food, a real sense of togetherness... when I lived alone as a student, I used to opt to work the whole Xmas period as it was much more Christmassy and fun than being at home! Not depressing at all. Staff and residents would really get into the spirit, and there were lots of families with children visiting. The children seemed to love it, they'd go from resident to resident being made a fuss of!
Two residents have Alzheimer's ex mil moans about them regularly running around in all sorts of condition
Not sure what you mean by this. If you mean they are wandering around a bit confused, I don't see how this will affect your DC. I work with people who have Alzheimers and most don't display challenging behaviour or aggression, they are just forgetful and prone to anxiety, needing extra reassurance and prompts at times. Many are able to live relatively independent lives for years, with minimal input from staff. I very much doubt they would be in sheltered accommodation if they needed a high level of care or were prone to aggression, not just for the safety of visiting children but for the safety of other residents too. Normally they'd be on a specialist EMI unit or dementia unit if they were unpredictable, aggressive or needed a lot of help.
Can you ask to see some photos of the rooms if you're worried? Why can't your DC share a bed if it's only for a couple of nights? Or take a sleeping-bag/camp-bed? If your 5-year-old needs to let off steam, surely your DH will take them out for a walk or to a nearby park so they can run around? There may also be a big lounge and a garden they can play in.