I appreciate all the help and advice. After reading what you guys have said, I think I am just going to keep it in the exact condition it is and just put it in a nice mount to hang on the wall and display it. I know it wouldn't win any shows, or even be fireable, but I has a lot of sentimental value.
I will be looking to eventually buy another Krag that I can actually shoot. What I love about my grandpa's Krag is even in it's current condition, I have never felt a bolt so smooth. Again, thank you for all you advice on this. It is nice to know there is a place where a stranger can get some good advice from good people. Thank you.