This is a tough one. Knowing myself, I would go with one "extreme" or another. Either I would make mention of it from the moment we said "hello", or I would never, ever, ever mention it. Actually, the more I think about it, I would probably go with option B. This way, any potential awkwardness is averted, and I hate awkwardness.
Now I am amusing myself, imagining how I would try to explain this situation to my great-grandmother if she somehow reappeared.