My significant other is caring for 2 parents 24/7 for 6 months, she is exhausted and needs a break. She even lives out of state and her 2 siblings that live in stete can't or won't help

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Not quite sure how someone who lives in a different state from her parents manages to care for them for six months, every day, every hour.

Was this intended to be temporary and it is becoming permanent? Dementia has a bad habit of getting worse, rather than better. Perhaps when she returns home (to her home state), the siblings who live nearby will step up to the plate.

However, your question was, can her parents spend their retirement income to stay in a nursing home while your friend takes a vacation? Yes, I believe they have the right to spend their money however they wish.

Better question would be, can they find permanent lodging or live in help or a rotation of aides that would allow their daughter to return to her own life? Or could they be moved to be closer to her home so that she can look after them and be at her own home. Some long term planning needs to be done.
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