I doubt the problem is with the rifle. I don't think that grandpa could have shot it enough to wear the bolt lugs enough to cause excessive headspace nor do I think he backed out the barrel. The case head seperation is caused by trying to get one too many reloads out of your brass. I do that all to often myself and the photo you showed is exactly what happens when I push the envelope. Headspace dosen't always do that. I watched a guy in a Leg match shoot 30 plus rounds of 7.62 in a 30-06 Garand and none of the case heads seperated. The brass looked like 45-70 but was intact and that's 1/2 inch excessive headspace. I'd try some new factory ammo as suggested. If the problem still persist have a gun mechanic gauge it.