Oh OP, sorry, but I’m with your sister.
sorry this is long..
We unfortunately made the mistake of a retirement flat between house and care home for my MIL. If we had known how it would be, we would have skipped the hassle of the flat.
It’s a nice idea to think it will give dementia sufferers more independence for longer, but decline takes hold - sometimes in surprising ways that catch everyone off guard. It can get to a point quickly where it’s dangerous for the person to spend much of the day alone and in their own care.
We realised my MIL just used to spend her days confused on her own, moving things around from place to place in her flat. She started wandering really suddenly and her carers (once in morning and once in evening) used to stick a meal in the microwave and then leave so they went uneaten. That carer setup was as expensive as a care home!!
Now, she spends her days in the care home with constant support and company on tap when she wants or needs it and 3 good meals a day. Everyone is happier, most importantly her (although not took a while to settle).
I really get where you are coming from and it’s such a hard decision to make not having been through it before. Dementia is such a sad illness so I understand you wanting to give your Dad as much independence as possible for as long as possible, but from someone who has been there, if he has the opportunity to live in a care home with a good support structure and a dementia focus I’d 100% just get him settled in there. That said, assuming he’s under NHS dementia care - what are their thoughts? Good luck with whatever you decide.