It still looks so pretty! How about old lace hankies made into butterflies over the holes or hearts as Dolphyngyrl suggested. I would also redo the batting and back. You could also try to find a picture (such as of your grandma) and have it put on fabric then use the good outside part of the quilt as a frame around the picture applying applique hearts or flowers around the picture and a few on her quilt frame to tie them together. Good luck!