Thomas - S&S Firearms, Glendale, N.Y. has some Krag parts, original and reproduction. They have a catalog that is viewable online. (Ignore their 'reproduction' 1896 carbine rear-sight. It is just a rifle sight that has been altered, ruined & over-priced).

You have the right mind set - it's a family heirloom and do no harm.

The 'high' front blade is not a problem. For 'shooting', correct, as you have stated, by raising the rear-sight elevation.
(I only mentioned it because the blade did not appear to be the carbine version. Possibly, someone put the higher blade on to function properly with the peep sight that was mounted high on the side-plate).

BTW - The front-sight pin is slightly tapered and is driven out 'Left to Right'. It is very hard to find Krag carbine front-sight blades, so I wouldn't mess with it.

I would start out by getting a Krag rifle rear-sight and screws (S&S has repros with the correct thread, .156"X 30TPI. You won't find those at ACO or most gun-shops). Rifle sights and screws show up on ebay, often. (Search: "Krag rifle").

If you have a sight on it, you can enjoy shooting the old family Krag!