Um no. Dog needs to be put down, period. If it did it once, it'll do it again.
Here's the thing: Grandpa Jackass should care more about having his fucking grandkids over in complete safety than his feelings about the dog. All it would've taken is an inch or two over and bam, kid's eye is damaged.
In many countries, that is not how it works. The dog did not actually kill anyone, nor did it severely damage anyone. You deny all interactions with a dog when you have a one year old, period. You do not just take that rule aside for one minute to see what happens without knowing the specific behavioral patterns of said dog (and even then, extreme caution is needed with ALL breeds).
Many shelters and animal care groups actually take problematic dogs like this for a complete psychic evaluation and they undergo some heavy tests to determine whether they can be disciplined or not. AFTER they are declared unfit to be with children/normal social life even with other dogs/cats, they can STILL be used for several roles (for example, outside dog as farmkeeping, etc), but only under strict guidances.
Bottom line is, ANY light injuries could lead to death when said injuries are applied to not an adult or a 8-10+ year old children but a 1 year old instead. Which means that potentially ANY badly kept dog could do this in the exact same situation, which simply means that generally, you do not leave one year olds unsupervised with unstable dogs. Not for a minute, not for ten seconds, not for a moment. Not that you kill all unstable dogs for some nonsense reason.
Dude, just take that dog away and put it down or something even if they don't want to.
IMO.
Advocating murder/animal cruelty?