My wife is in early to middle stage of Alzheimer's Disease. She has been on Donepezil low dose for about 1 month. 2 years ago she was taken off Donepezil because she complained of nightmares after only taking it for 3 weeks and started on Memantine. In the 2 years since she is still on Memantine and is still getting nightmares despite being off of Donepezil. Since re-starting Donepezil I have seen no increase in the nightmares although she still gets them occasionally.
I find when I dream or have a nightmare it dissipates faster and I forget it if I open my eyes then go back to sleep.
My son got night terrors as a young child. It was not possible to wake him, he would thrash about if I tried to hold him to calm him down. The one thing that worked was rubbing his feet. I would hold one foot with both hands and rub the soles of that foot, then go to the other foot, usually by the time I had rubbed both feet for 10 minutes or so he calmed back down into normal sleep.
I have no idea if that would help your wife, but it may be worth a try.