A deranged cage fighter who was caught on CCTV beheading an elderly woman and two cats during a 45-minute rampage through back gardens will be locked up indefinitely in a psychiatric hospital.
Nicholas Salvador, 25, believed he was killing "demons" when he ran amok, tearing down fences and kicking down neighbours' doors in Edmonton, north London, on the afternoon of September 4 last year, the Old Bailey heard.
Video footage taken from a police helicopter overhead showed 82-year-old cafe owner Palmira Silva, wearing a pinny, approaching the bare-chested Salvador over her garden wall.
After a brief exchange, the crazed killer vaulted into her well-tended flowerbed and stabbed her repeatedly before cutting her head off and holding it aloft, the court heard.
The final moments of Mrs Silva's life and the immediate aftermath were edited out of a harrowing 14-minute clip shown to the jury in front of members of the victim's family.
Afterwards, children playing nearby had to be hastily taken out of harm's way as 6ft Salvador strode through backyards towards them, brandishing his weapons.
On the CCTV, an officer could be heard to say: "He's agitated and lethal ... he needs taking out."
An officer climbed on to a flat roof to warn the youngsters of the danger before they were rescued from a front window.
Salvador was eventually cornered in the front room of a neighbour's house and Tasered six times during a violent and chaotic struggle in which one police officer was injured.
Afterwards, he showed signs of mental illness, repeating phrases like "red is the colour" and "I am the king" over and over again.
Salvador had denied murder by reason of insanity and his trial heard that two psychiatrists agreed he was suffering from paranoid schizophrenia.
In his demented state, he believed Mrs Silva was a supernatural entity - either Adolf Hitler back from the dead or a demon who had taken the form of a little old lady, jurors were told.
Before the killing, Salvador, from Enfield, had become obsessed with the idea of shapeshifters.
The skunk cannabis smoker had lost his job in billboard advertising three days before the killing over concern about his behaviour.
At the time of the killing he had been staying with friends three doors away from Mrs Silva in Nightingale Road.
After being charged with the Italian-born great-grandmother's murder, Salvador was remanded in custody at Belmarsh prison but, due to his mental state, he was moved to high-security Broadmoor Hospital.
In his closing speech, Jonathan Rees QC told jurors that there was no dispute that the correct verdict was not guilty by reason of insanity so Salvador could be treated and the public protected.
He said: "There is no issue between the prosecution and the defence and the evidence has emerged as we expected.
"This was, was it not, a deeply upsetting and horrific incident. Mrs Silva was not targeted because of who she was. She just happened to be in the wrong place at the wrong time.
"But for the efforts of the police and a measure of luck other people were not seriously injured or worse.
The defendant was a very sick man."
Bernard Richmond QC, for Salvador, said: "It is one of the bitter ironies of this case that Mrs Silva was probably the least evil person you could think of and it is noticeable that throughout this trial her family ... have conducted themselves with a quiet dignity which is a tribute to both themselves and Mrs Silva.
"It is plain also that when he is not unwell Mr Salvador is somebody regarded as a decent man.
"Mental illness in whatever circumstances can be terrifying for the person and one of the things we have to bear in mind that, after this case is finished, he will have to continue, as his mental state improves, coming to terms with the horror of what he did when he was unwell."
The need for a jury to formally decide the issue of insanity dates back to a 19th century law when being labelled a lunatic had awful consequences.
The jury retired at 11.40am and returned the verdict of not guilty by reason of insanity after 40 minutes.
Salvador is expected to continue his treatment at Broadmoor high-security hospital.
Mrs Silva's family wiped away tears and hugged each other as the Recorder of London Nicholas Hilliard QC handed Salvador a hospital order.
The judge said: "It is established beyond any doubt that you killed Mrs Silva in an attack of extraordinary brutality and ferocity.
"You thought you were encountering some demonic force which had taken on a human form. You could not have been more deluded.
"Nobody who saw it could forget the mild and trusting way Mrs Silva approached you over the wall while you were brandishing a knife."
He added: "This gentle, intelligent 82-year-old lady should have been able to live her life in peace and with security, proud in the achievements of others, but that was not to be."
The judge also commended all the police officers who worked to protect the public when they captured and restrained Salvador.
In particular, Pc Steven Robertson was praised for climbing on top of a roof to help bring two children to safety.