Just my mind reading logic here ... the sister/mental ill bit may have just been a test to see if Irish would take the bait and pile on the "Mental ill" wagon. If she is anything like mine, she knows something is off but does not want that terrifying mentally ill label thrown at her by those she respects .... as hard as it is to believe sometimes they do look at the LBS as an authority figure and fear rejection ...which seems to me like she is testing at the moment. Again ... just my opinion and take on this new revelation she has ramped up communication quite a bit as of late, I would agree reality has set in and the fantasy is losing its shine so she is circling back and touching base a bit.
Irish you are handling things very well ... it is so easy to get sucked in but as you mentioned they are craft and tricky creatures, but you are swift on your feet and you have been at this long enough to have the tools to navigate this .... and like I , you realize if things can be patched between her and your daughters they would be better for it ... again its on her to do this but I too am hopeful for 'the awakening' if only for my sons sake.
Hang in there Irish I have a hunch she is not done yet.