When Grace sees Anne as an old woman in the attic (or whatever)

I was trying to figure out why Anne appeared to Grace as an old woman in that scene. Was it (1.) simply an artistic way to illustrate that Anne was actually dead, or (2.) was Anne 'possessing' that old (living) woman who was now dwelling in the house, or (3.) was Grace finally starting to 'see' into the realm of the living, like Anne was already doing? Numbers 2 and 3 are obviously somewhat linked.