your bike is pretty sweet just as it is.
I am with the ones saying that the repair may be ugly, but they have lasted through time. For what it is worth, I would just clean it up, service it and ride it as is, it is all part of the bikes story and history. I have a bike with a wicked repair at the head from the bottom tube, it rides great and I am not going to change it.
Your Grandfather left you part of his memories to treasure. Enjoy them and someday pass them on to your grandkids.
congratulations.