Yes, it is a serious problem.
I have no idea what the least invasive treatment option would be. I don't know whether this can be resolved by psychotherapy alone.
As she is experiencing psychotic symptoms it does make sense that she should be treated with anti-psychotics. I'm not sure how well insights, etc could be accessed without them and with therapy alone, if at all.
The doctor will be better able to answer your questions.
This is a serious condition and does require both medication and counseling. You should encourage your wife to comply with the treatment recommendation, and be sure to keep her appointments for counseling.