"Not being able to handle your own affairs" and being "a danger to yourself and others" are two completely different things. The former should have nothing to do with your 2nd Amendment rights.
In extreme cases, I don't have any problem with the VA having the power to temporarily restrict the right to possess a firearm. However, the veteran should have the right to a rapid review of the decision, and ultimately it should be decided by the courts - not an administrative agency.
For questionable cases, the VA should have to apply for a restriction from the courts. Or at least from an administrative court with a well defined appeal process to a real court.