That sentiment may seem strange to most people but I think it's more than just a logical conclusion, it's an emotional one as well.
We recently lost one of our family's matriarch's (grandmother-in-law) after her long battle with a failing cardiovascular system. After one particularly difficult evening, she realized her time was about to come and asked her husband to stay by her side while she passed in their home. Unfortunately, her end did not come easily and a relative convinced my grandfather-in-law to call an ambulance when she went into respiratory arrest as it was shockingly painful to watch. She was taken to the hospital and placed in the ICU where she was stabilized but only at the footstep of death's door. The miracles of modern medicine managed to keep her borderline comatose body alive for almost a month in the ICU before the family could come to agreement on sending her to hospice.
That month in the ICU cost almost everything they had worked their entire lives for and was intended to be passed down to their children and grandchildren. Two lifetime's worth of hard work and thoughtful planning went to cover the cost of just one last month of "life".
My point in sharing that story is that the true cost of that month isn't measured in dollars and cents, it's measured in the loss of the legacy they had worked so hard to build. Neither of them viewed their estate as something as simple as "money". Instead they saw it as things like "college tuition for the grandchildren", "a wedding gift to help the grandkids start their married life", "land my ancestors have lived on for generations", and "one last vacation for the whole family". That's what I mean when I saw they lost their legacy and why it's as much or more of an emotional decision than a cold calculation of financial realities.
Colorado's law is fairly specific to those that are imminently terminal (6 months or less), so most forms of dementia do not qualify.
I'm terribly sorry for what your father, your family, and you are going through. I wish I had some words of comfort, but really there is nothing good about where dementia will take him or your family.
I went through a fairly similar experience with my father who had PSP (Progressive Supranuclear Palsy - http://www.psp.org/). Early on in the disease he was aware of his mental decline and expressed a desire to end his own life. Everyone was concerned and the doctors ended up putting him on antidepressants. If only we had known how bad things would get...
There are many forms of dementia, and nearly all of them involve a horrible quality of life at the end.
My brothers and I joke about taking up skydiving in our retirement and packing our own parachutes. If our mental acuity declines to the point where we pack the chute wrong, then at least it would be a quick end.
A big advantage of having this written (and binding!) is that it takes the burden off of family to make the decision. Many people cannot make this kind of decision for others when they are incapacitated.
Interestingly, he's got one of the weird dementias, called "primary progressive aphasia", which is slowly robbing him of the ability to speak. There are cognitive deficits as well, but the main issue is that he has trouble formulating sentences. So if we lived in Colorado, when he actually wanted to die, he would be unable to fulfill these requirements.
Also interestingly, part of his motivation is explicitly monetary: he wants his life savings to go to his family, not a nursing home.
This experience has reaffirmed my position in favor of right-to-die, but it really is a complex issue. If gran-gran doesn't want to go to the gas chamber, there should be stringent protections in place to keep her family from sending her there.