The onset of dementia isn't surprising for an 88-year-old, but I have a question: Has your mother been routinely anemic (low hemoglobin) despite the MDS treatment?
I spotted a study that found a link between anemia and mental decline in women over 70. They didn't prove cause and effect, just an association, but since oxygen powers our brains it makes sense that being low on oxygenated blood could contribute to problems with mental processing. The problems you describe sound like more than the simple confusion that many patients experience and call "chemo brain" but I think it's worth asking the doctors if anemia could be a contributing factor.
The study was done about 2005 and is described
here. There's an easier-to-understand summary
here (may require Medscape signup).