But surely, the OP's mum persistently going into the neighbour's garden when she has been asked not to is effectively trespassing? So the police would be dealing with one 'crime' and then another in retaliation. And presumably having dementia is no defence.Throwing water on anyone is an assault at common law technically known as "common assault" Anyone convicted can be bound over to keep the peace so that if it recurs they can be taken back to court and dealt with more severely. If the water causes injury there could be a crime of causing actual bodily harm (ABH in cop speak!). You should definitely report the matter to your local police. At the very least I would hope they would go round and "give words of advice (more cop-speak).
I'm sure the police could 'have a few words' with the lady but she isn't going to remember or change her behaviour. Speaking to the neighbour would definitely be more useful as the police could tell him to either phone them or social services to deal with it rather than him taking his own water-throwing action - which isn't helping anyone.
OP's mum may not be ready for a care home right now but there are definitely warning signs here. Getting her 'on the radar' with both police ans SS will help in terms of evidence of her needs when the time comes.