A difficult situation which is only hightened by the attempts to preserve the dignity and self respect of the person. I personally feel that our elders should be given the chance to do what they want.....as long as they are in a "sound enough frame of mind" to make the decision. All the possible difficulties should be presented to them but the ultimate decision should be theirs. We did not like it when our parents told us what to do in our teens...neither will they like being told what to do in their twilight years.
If they make the firm decision to go home then it is their right and should be upheld....all support systems available in place of course.
We feel we have to take such responsibility for our elderly parents but sometimes we are forced to bow to their wishes...possibly at their cost.
There is no easy answer....but...I would suggest you follow your heart and the counsel of Doctors/Social workers and 'allow' things to take their course without heavy interference....not easy to do with someone you are so close to.
Best wishes, Mike.