Do I include the rose water in the dish? Or just remove the saffron and put it in?

From the author's headnote, she clearly intends both the saffron and rosewater to be in the dish. However, yes, the directions omit when to add them.
Probably best place (both from this recipe and others for the same dish) is what's here step 3, assembling the aromatics, spices and liquids for the sauce.

Don't take the saffron threads out! They add flavor and a nice red/orange colour to the liquid. Not to mention, they are expensive to begin with! A few threads go a longggkggg way! I would add in the rose water liquid in the end after the stew is cooked.