No experience, but random thoughts.
Do you have siblings?  Have you discussed how far you're willing to pursue it to regain control?
Is she being exploited because she's mentally incompetent or early Alzheimer's?  Get a doctors appointment.

Do you want to try and take over her financial affairs or would you be OK with someone else doing it?  Talk to her banker and see if he has experience with this type of situation.
Ask her if she'd consider having 2nd signatures on checks?

Is there another person in her life whom she respects and would listen to - Pastor, sibling, trusted friend.
Could you do an intervention with all present?
Ask her whether she's honoring your dad's memory in the way she's using the monies he left her? 
If she's just lonely and making poor decisions that she'll have to live with, discuss with her what the future will hold when the money is gone. 

Shown below are a couple agencies -maybe they can point you in the right direction or guide you on how to approach the situation.
It doesn't sound like she's fully making a rational approach to spending money.

Eastern Nebraska Office on Aging - I'm not sure if you're in their area, but they could point you in the right direction
http://enoa.org/

Dept. of Health and Human Services- look at the section on abuse and neglect and then adult protective services.  She may be considered a vulnerable adult.
http://dhhs.ne.gov/Pages/aging.aspx