Her ability to reason or form an intent should be a matter to be decided when sentence is handed down. Sentence can have three intents: protect society from the criminal, rehabilitate the criminal so that society will be safe in the future and (lastly) punish the criminal for their acts. In this case, punishment is not indicated (her intent, as you point out, wasn't evil per se), but it is still necessary to "rehabilitate" her (treat her mental illness) and it's still necessary to protect society at large from her until she is rehabilitated.

And her point was to kill - she knew that she was killing her children. Why isn't relevant to her guilt or innocence, only to how we as a society answer this heinous act. That she was deranged and believed she was saving her children from the Devil is irrelevant, she still knew that she was manually drowning her children. She still knew that they would be dead when she was finished. Sophistry and rationalization cannot change the fact that she knew she was killing her children; no matter how good a reason she felt she had, she knew what she was doing. Not necessarily that it was wrong perhaps, but certainly she was aware at least of the fact that she was killing her children; and she did it intentionally - it's not like she accidentally dropped them in the bathtub, or accidentally burned down her apartment with her kids inside. Even if she couldn't distinguish right from wrong, she acted with the intent of killing the children. Let guilt or innocence describe the acts taken, let sentencing reflect the circumstances surrounding those acts.