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I think that marking may be RED JACKET No. 3, not No. 8.
That Red Jacket series was made by the Lee Arms Co., of Wilkes-Barre, Pa., and some are so marked. There were the Red Jacket, the Red Jacket No. 1 (same as Red Jacket) and numbers 2, 3 and 4. The RJ and the RJ No. 1 are .22; the others .32 rimfire. They belong to a class of inexpensive handguns called by collectors "suicide specials", though it is unclear whether the term means that they were considered only good for one shot, or that a person armed with one would be committing suicide to challenge a better armed opponent.
Ammunition is not readily available, and I would recommend against firing the gun in any event as it was made in the black powder era. That gun appears to be blued, which is unusual, as most were nickel plated. The engraving adds to the interest, but not a lot to the value as engraving at that time cost a whole $.25 (yes, a quarter) extra. The guns sold for around $2.00 in the 1880's and 1890's.
I think had I felt the need to carry a gun in that era, a much rougher time than today, I would have had a better one, but apparently your great-grandfather thought it was adequate. Or maybe he was the kind of man who didn't need a gun to control his customers.
The "button" on the left side ahead of the cylinder is the cylinder pin catch; pushing it to the right should allow the cylinder pin under the barrel to be pulled forward freeing the cylinder to come out. That is, if the parts are not rusted in place. Even then, you could try removing the grips and soaking the gun in a carburetor cleaner or something similar to try to free things up.
The value, in dollars, is not much, maybe $75-100 tops, mainly because of the engraving. But the family history - priceless.
Jim
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