Hi, were you able to get it down to completely water? It sounds like she just wants the bottle for comfort since your family is going through several changes right now. I personally wouldn't be worried about the teeth for a little while longer, maybe age 2. You have so much else going on right now I'm sure!

My brother is a pediatric dentist, and he strongly advises not to put baby down with milk of any kind. That said, I nursed my now 18 mo. daughter most nights up until she was about 15 months or so, and sometimes lately if she is really tired, she'll fall asleep while nursing also. My mom would give us a bottle with water in it at night after she brushed our teeth when we were toddlers. There's not really anything wrong with that in my opinion, and if it's something that works & provides comfort, then why not? Most pediatric dentists recommend ditching the binky/bottle by 2 and the thumb by 3. I would imagine that by the time she is 2 (or before), you can begin to reason with her better, as she will be able to comprehend more, and you'll probably be able to make better progress then.
My suggestions for you would be to 1)continue to dilute the milk more until it is only water. Until then, make sure you brush her teeth first thing in the morning! 2)introduce (if you haven't already) a lovie/stuffed animal that she can have at times she needs comfort (i.e. nap & bedtime). This way, when you do ditch the bottle, she can still have an item of comfort that she is used to.
Hope this helps!

thanks for the advice, she gave it up on her own about a week ago