Death has a profound effect on people. I am so sorry for your loss. I work in an assisted living community. Also, my mom has dementia. Sadly, I have some experience with this type of family issue.

If I were you, I would book the second limo and use it for anyone not in the original family. By original family, I mean father mother and siblings. No spouses and no children. My guess is that the stress for your mother in law is far beyond what anyone can see and your sister in law is trying to make it as easy for her ( and herself in dealing with mom )as possible. If mom is indeed demented, there are no explainations for the behavior other than brain disease. It is not about anyone but her and it is not reasonable. Mom may be only seeing her original family at this time.

Again, I am sorry for the loss. Please find comfort in you husband and children. No one really handles death well. Take a deep breath and allow yourself to grieve without the additional anger and stress.