Nice story, so easy to identify and something to learn. Seems to me that seeing yourself clearly and learning is a reason to rejoice, not feel bad.
I have a similar situation except my "other grandma" is an expert seamstress. She is Mexican and years ago found herself with two tiny children and no husband. She aquired a treadle sewing machine and taught herself to sew, then worked in a suit factory and doing private commissions. Now, she only needs to see a picture in a magazine and she can reproduce it - custom made for a client. Needless to say, she sews wonderful things for the grandchildren. I once said to my daughter-in-law " I can't compete with her" (yes a little green monster was whispering in my ear). My daughter-in-law said "this is not a competition, they love both of you", which is absolutely true.
And I have been able to see how much she enhances their lives - at 4 and 7 they both speak Spanish and English fluently and have a broad view of cultures and people and, this is most important, feel loved by all sorts of people.
In terms of sewing, I stick to quilting for them, having quilted some of my grandson's "art" and she makes most of the clothes and we both appreciate each others talents. At one point she said she could never quilt like I do. Well, I know that isn't exactly true - if she turned to quilting she'd leave me in the dust - but it was kind of her to say.