Wow - it's a bit of an understatement, but this certainly is a problem! It's difficult as you all love your grandpa, and want to do what's best for him, yet when it's affecting everyone else in such a way, something has to be done.
Can I ask a couple of questions though - I may be entirely wrong, but from you post I suspect that your mum may be faced with most of the brunt of all of this - what do your uncle and auntie (her siblings) feel of this... compared with your mum, are they as involved, perhaps as 'pestered' (for want of a better word) by your grandpa so much?
Regardless of your grandpa's stories, and outpouring over the years ocmapred with so many years initially spent bottling up all emotions, no-one can truly empathise with what your grandpa went thorugh... the emotional suffering is clearly having an effect on him today, and although fellow veterans on both sides are perhaps closer to such empathy, I can't help but feel that your grandpa needs some more professional 'talking therapy' of some sort - it's all very well relying on close family, but when such experienes literally begin to consume your every being and affect your family in such a way, that's when it becomes a problem rather than a more expected reaction.
From the sounds of it, I think the most significant issue is not necessarily your grandpa's 'obsession', but the fact that quite innocently he is oblivious to the effects it is having on loved ones, as signified especially by your grandma's sight issue. For this, although easy for me to say, I think he must be told, in as gentler way as possible. Perhaps your mum along with your auntie and uncle (not necessarily your grandma) can all sit down with your grandpa and talk it over? Yes, it may get argumentative, chances are it will considering your grandpa may feel that everyone is ganging up on him, but if you stress that you love him and that you understand the need for him to follow his war experiences through but also let him realise the effect it has had on you all as well as the effect it has had on himself, then some sort of conclusion could be reached?
It's difficult to suggest what to do, but just imagine what would happen if nothing was done: it would continue, and I think that will do much more harm in the long term, not only for your grandpa, who needs at least some closure on the past, but for your mum, gran, and of course yourself.