I'm just about ready to get son number 2 on the back of the GS. He is 6 and can touch the passenger pegs. His brother is 11 and has been riding on the back since he was 6 or 7.
Besides being ATGATT, I keep them tethered to me via an old climbing harness and quick draws. At least for the first year.
We also have a system of 'taps' to let me know what he needs.
One tap-gotta pee
Three taps-slow down
I also make sure he knows what I am doing. I'll give him a tap on the knee when I am going to accelerate into a pass or before I slow for a turn.
As for the grandparents.....whose kids are they?
I sure as h&!! don't ask my folks what to do with my kids.
My dad and I have ridden together a few times, but I never rode on the back with him driving. He has been a passenger on my bike, though.
I find your lack of faith disturbing.