First off welcome to the forum.
Before you start working on your grandfather's Krag I would recommend hanging around here for a while and going back through some of the older threads.
Second, I do not think heat would help removing any Krag barrel. They butt up against the internal stop in the action, and I do not think you will find any that will take any kind of cheater or real torque to remove. Heat can damage things so I would not do it.
I have seen some sporterized Krags that looked nice with bluing, but original Krag actions were not blue and a restoration with blue does not look right.
  Others that are more into collecting will comment on the wisdom of trying to restore something that needs so much work. If it is a bucket list thing for you maybe, but I have my doubts as to whether it would be monetarily a good thing.
Personally I think it might be a better goal to get it back to a hunting condition. Hunting with a Krag will make you smile.
If the scope mounts line up, a good low power scope might be the ticket.