Andy:  I quickly checked Poyer's book "The American Krag Rifle and Carbine".  Serial # 55897 was probably made in February 1897.  Your 1896 Krag Rifle likely saw use in the Spanish American War.  To drill holes in its receiver would ruin an interesting and apparently original rifle (30" barrel & full length stock).  Every year the number of original Krags lessens, usually due to fire, flood, or storms.  It is a real shame when collectable guns are lost due to misguided gunsmithing.  Putting a scope mount on your Krag's receiver by drilling and tapping holes will ruin your heirloom and turn a $800-$1500 desireable rifle into $400 of parts.  I don't know in what state of condition your rifle is.  I don't know if you have paperwork from when your grandfather purchased it from the government.  It would be fun to see some pictures of it on this Forum.  If you post some photos, you will get a lot of good info. and advice.  You might consider selling your rifle at a collector's price and pickup a sporterized Krag for shooting.  The scope rail that replaces (temporarily) the rear sight and allows a long eye-relief scope is a good option.  Just leave your hand-guard off the rifle for clearance.  (To take the handguard off:  Remove the rear sight, Take the barrel and action out of the stock with handguard attached, Wipe the barrel with a lightly oiled cloth, Rotate the handguard 180 degrees and pull it forward off the barrel).  Store your handguard with an appropriate diameter dowel inserted in the clip-springs to prevent spring tension from cracking the wood.  Never, Never snap a Krag handguard over or off a barrel or dowel.  Slide the handguard on and off.