To me, the iPad is kind of a red herring. I see the situation as, FIL wanted to give something specific to his granddaughter, so he went to the parents to ask first, which is good. The parents and FIL came to an agreement about what FIL would give and how he would give it. It was a compromise, not the parents' first choice and not FIL's either, but it was what they agreed to.
Now FIL is making noises about changing that agreement, and going ahead with his first choice plan. To me that's not polite. He should abide by the agreement he made with the parents. He can politely ask to make a new agreement but has to accept that 'no' might be the answer. And I guess, since he's the one giving something, he can decide to completely back out, and not give anything at all, though this would be flaky barring extenuating circumstances.
But it seems to me like he agreed to something with the parents, and now is turning around and saying he's going to do what he wanted in the first place instead. And I don't necessarily think it has to be malicious or controlling, he may not realize that this part of the agreement was important to the parents--he might think of it as a mere detail (though they explained otherwise).
I think someone should be able to politely say to him, "Oh, FIL, I thought we agreed that would be a family gift for all of us, and that it would NOT be wrapped or given directly to DD. Have you changed your mind about that? You can just keep the iPad in that case, if you prefer."