Exactly my feelings.....Cut down barrel, cut off butt plate, 'reshaped' grip, drilled and welded receiver....too many things to do to this rifle. Leave it as is since that's the way your great grandfather gave it his 'personal' touch. You can pick up a good RC K98 to change over, or better still a Yugo 24/47 or M48 would make a good rifle to convert. Just My Opinion....Another sad tale here, so perhaps just enjoy it as she is - in the memory of Great Gramps.
From 2 standpoints, the short ans is "No" & here's why:
1) Collectibility. Mods of this type are permanent & frequently get slapped w/ a "Bubba" handle.
2) Integrity/Safety. The native metallurgy has been irrevocably altered to an unsafe (softened) condition by welding. Firing this rig could become a face-altering proposition.
Some folks may jump-in here & claim that it might be re-heat treated after normalizing.
As always, YMMV.