Charcloth,1) Check out the Suzuki methods for the very young. But remember, it requires intense parental involvement.
2) At around age 5 a child can begin playing an instrument by imitation.
3) At around age 8 a child can read and begin traditional lessons.
4) Years ago I heard of a method being used in elemtary schools which used a lot of making instruments and lots of involvement playing them. I'll see if I can find any references.
5) You can probably do internet searches just keeping the above guidelines in mind.
6) It's difficult to give "lessons" to your own child or grandchild, but you can provide a wonderful environment.
8) I like the Montesorri (Sp?) methods for teaching very young children
Let us know what you find.
Mary
PS I just reread your post...I think any kind of "play" with music, or instruments, videos, etc. will be very special because Grandma/Grandpa are involved and giving special attention. OOOOOO...I can't wait, myself.