The denial of mental illness is part of some mental illness.
I think you are right to tread lightly and not confront her. She has shown no openness to have dialog with you about any of this. This will only corner her and she will act out more. She is not rational and she is under the sway of a powerful delusion that my own son seems to share. This has got to play out.
Little by little she will tire herself out enough to be open to you, in order to come in from the cold, so to speak (you're in a desert, right?) or she will get herself in a state where she will come up against the authorities or in mental health crisis. Or both. This is no solace to you, I know, but I think this is realistic.
Meanwhile you cannot involve yourself with her if she is destructive, disrespectful and aggressive towards you, even if she is mentally ill. That's what I think.
I think your instincts are good. I know how hard this is. I am glad you're here with us, and sorry you have to be. Meanwhile, I hope you keep posting. It helps. I have been here over four years. I seldom post threads anymore because I kind of know where I stand. It is not necessarily easier, but coming up against the reality of things, and accepting it, is what has made it more bearable to me. I have no control.