Kerry, I understand your pov but I think it's a little tainted by your own experiences, which sound horrendous. Would it have made a difference to you if you had someone you could trust and confide in? If you knew what was appropriate and what was not?
I've told my dc's that any area of their body that is covered by their swimming costumes, is private. That no-one is allowed to touch those areas because they are special areas and they belong only to them. That if anyone does try to touch them in those regions, they must tell an adult straight away.
You cannot guarantee your child's safety 100%, but you can ensure that your child knows they can come to you about anything. That they know that secrets kept from mum or dad are usually bad and that they will never get into trouble for sharing something that is worrying them.
I do think that in this case, if the ds was worried at all, he wouldn't be willingly going into his grandparents bed. It also sounds like he has an open relationship with his mum and is happy to talk about his grandparents nudity.
I don't smell abuse here at all. I can see why you do, but in this case I don't think it's there. Why punish these grandparents for the sins of others?