how to explain previous boss was demented?

A reader writes:

My last job was really successful and exciting and I would love to talk about it at length with future employers since I think it's very interesting and highlights a lot of my strengths. I started as an unpaid intern and was promoted to paid assistant within two months. I had a massive amount of responsibility as it was only me, my boss (the owner), and a couple part-timers and interns. In fact, I can honestly say that I ran the office singlehandedly when the boss had a personal emergency that caused her to be out of town for five weeks. All the bills got paid, all the clients were taken care of, I cleaned the office, and I rounded up some new business, all on my own.

The problem is with the reference. My boss has undiagnosed dementia. She has eight out of ten of these symptoms. I have a family member with Alzheimer's and what those symptoms don't really go into detail about is that a person with dementia, especially early-stages, can be really paranoid, angry, and lashes out. My boss was always "eccentric," in fact, everyone I spoke to said that the mark of a good assistant to this woman wasn't any progress in trying to streamline or organize her business in any way, but merely to survive her daily abuse and mercurial moods and whims.

However, after she got back from her emergency, she sweetly told me that she had to let me go because her business was suffering terribly. I asked if there was any feedback or any problems with my performance and she said that no, she loved me and would give me a glowing reference. At first I was ecstatic. I would make way more money in any other job and frankly, it was like I'd suddenly been released from a terrible prison camp. We emailed once or twice over the next couple weeks, when I got two painful surprises:
1. I had been replaced with a paid assistant (i.e., "secretly" fired, I guess).
2. I asked her for that reference and she sent an email that said, essentially, "how dare you ask me for help after all that you did!" along with some personal insults.

I know as well as I can (my personal experience, and asking others who worked with me) that I worked my butt off and I didn't hide dead fish in her office or anything like that when I left that would warrant such anger. My best guess is that this is like my relative with Alzheimer's. She'll accuse other family members of "stealing from her" when they merely pay her utilities, etc. I think that instead of being happy that I took care of the office in her time of need, the experience terrified her, and anything I had moved was stolen, any bills she later forgot to pay was actually something I had messed up, contracts that disappeared into her hoarder apartment I had probably taken away, I stole clients.....I really have no idea since she won't elaborate. I sent her a long apologetic email to that end, but no answer.

The best solution I can come up with is to allude to "difficult working conditions" in my applications, use my coworkers as references, and if I get to the interview stage, plainly state that my old boss has dementia. I can't help but thinking that some future employers may not believe me and that this is hurting my career tremendously. Any ideas?

I think your plan is the right one to use, up until the point where you mention dementia. I wouldn't mention the dementia -- because, no matter how confident you are in your diagnosis, it's your diagnosis, not an official one, and -- when you're talking to people who don't know you and thus don't know that you're not in the habit of throwing around such terms lightly -- it could end up sounding like you're being pejorative or overstating the situation.

But fortunately, you don't need to specify that your boss was suffering from dementia in order to make the basic point you'll need to make to prospective employers if they ask for a reference from her -- which is that your boss promoted you and promised you a glowing reference when she laid you off for financial reasons, but was extremely mercurial and since you left has been freezing you out, but that your coworkers can vouch both for your work and for the difficult temper of the boss.

By the way, any chance you have got a written performance evaluation while you were there? If so, you could also offer up a copy of it to demonstrate that it wasn't until you left that your boss changed her tune.

By the way, speaking of terrible, crazy bosses, I highly recommend this two-part horror/comedy from Radiant Veracity: The Devil Really Does Wear Prada and Part Two.