I never even thought of it that way. I'm pretty sure that's how they wanted her character to be. I think her sickness had something to do with how she acted, all she could remember was how great she used to be... I guess...

I've been away from here for a long time but I again disagree 1000%. Grace Wheeler's backstory as revealed in this episode is that her troubles began when Ned let her down decades ago. Ned's drinking and insecurities short-circuited what likely would have been a happy marriage for them both and continued success in their careers. Without Ned, Grace had to struggle and she ended up in a loveless marriage to a man who gave her financial security but who always knew she didn't love him and he was satisfied with the "trophy wife" arrangement. Combine that with the effects of an aneurysm, and I think what we saw was not the "real" Grace Wheeler. The real Grace is more the frightened bewildered one afterwards who has forgotten all about the murder.

That to me is why Ned's decision to take the fall for her until she dies works. It's his way of apologizing to her for being the cause of what happened to her afterwards. And it's the reason why this episode is for me the best Columbo, post-Season 1.