Thanks, all, for your input. He did indeed choose to be cremated and returned to his family for disposal. He's not an internment kind of guy - would prefer to be scattered (preferably all over Yankee Stadium).
His wife is planning a memorial service. Grandmother, if she cannot go, would like to have a memorial service of her own - WITH the cremains, thank you very much.
The solution, to me, is obvious. The cremains belong to DIL. My mother doesn't have a good relationship with her mother either, but has enough sense of filial duty (and guilt) to take care of her mother. Saying 'No' to Grandmother doesn't go well and, as my mother rarely says no to her, I can't imagine she'll start now. My mother will probably have some major stress-induced health crisis, if my father doesn't knock her off first (her mother makes her VERY grouchy).