Well, first of all, this wouldn't have happened to me, as KC would have received treatment throughout her childhood as she obviously exhibited these problems early on.
I would do everything possible to get her the help she needed, but I would not support her lies or stealing or lifestyle. I would let her live at home as long as she participate in paying rent and chores and took full responsibility for her child.
However, once she was an adult, and if the conditions continued , I would have taken her to court for custody unless she continued supervised treatment, and if needed gone for full custody of Caylee.
An adult who steals from family and others, fakes work, lives in an alternative universe and has no means of support for herself or her child would not stand a chance at retaining custody.
That said, if she disappeared with Caylee and refused contact with Caylee, I would reported this to the police upon first sign. I certainly would have called the police from the pound when the car was found.
I would not play games with her once she was located, but I would hire an attorney of solid reputation, as I would believe she was not capable of making sound decisions (this is not to say I believe her to be mentally insane) and we would need to know what we were dealing with. I just would want someone who had a thorough foundation in the law, would understand what we were dealing with in trying to find Caylee.
At this point, I would believe most likely she was playing a game, hiding Caylee and want to know where. I would bring back her therapists etc. I would not allow the media anywhere near us. Hopefully, as a team, we would learn what she was doing.
It would devastate me to learn the truth. I again would see that KC had proper representation (the idea that JB was picked because some other inmates recommended him is crazy) and I would tell her she is still my daughter, but I cannot understand what happened. Until she is ready to speak the truth, I won't be visiting or writing.
I would still not speak to media. I would see that my grandchild had a private burial and I would disappear, go away for a while. I would need to collaspe as there would be a gigantic meltdown for my daughter and granddaughter, whom I love, one who I tried for years to help have a better life and understanding, and the other who was just blossoming.