I, too, am a military Mom and I heart goes out to you, your daughter and grandchildren. I am so sorry to hear of your loss. I am finishing up a quilt that I made for my son's retirement from the Marine Corps. I didn't use any military fabric, but perhaps what I did will give you some inspiration to incorporate with your own ideas. I'm sorry I tried to attach a photo, but apparently my photo is too large to attach and I'm such a dinosaur when dealing with photos on the computer that I can't figure out how to resize it. I can do it using the email function (it does it automatically) so if you would send me a private message with your email, I'll be happy to forward it to you. I don't know how to do that either but I sent it to another lady who is making a quilt for her brother.
I found a stencil on line for the Marine Corps" eagle, globe and anchor. You can find these stencils for other branches of service -- just google "military stencils." I drew it out on paper and took to Staples to enlarge. From that I made applique patterns which I in essence replicated the Marine logo. The rope around the logo I hand embroideried. This was applied to a white background with crossed swords (enlisted and officers') appliqued so that they looked to be behind the logo, and then a 2" blue, a 1-1/2" red border, another 2" blue border, and then a 6-1/2" white border. I hand embroideried the three verses of the Marine Hymn around the logo (white on white), and then in blue, around the edge of the border. I embroideried each assignment and location, and in the top white border I wrote in trapunto his rank and the emblem of his rank, in the bottom border I put his name in trapunto. On the side borders I put in trapunto various Marine slogans -- OORAH, Devil Dogs, etc. If your son-in-law was a Marine, I would strongly suggest that you make sure the red "blood" stripe is included. That's what my blue and red borders represent. The red stripe for enlisted is 1-1/4 inch and for officers it is 1-1/2 inch. I am now hand quilting the borders and hope to finish before by summer's end.
I did a lot of research on line, studied a lot of photos on line, went to the Marine Museum and looked for ideas and, of course, my daughter-in-law was very helpful. It's amazing how just looking through the military websites help. Sometimes the most insignificant bit of info or photo will spark the most wonderful idea. What was his MOS? Where was he stationed? Was he married during his service? Were the children born while he was in service? Do you want to incorporate those events?
My original thoughts were along the line of a Baltimore Album quilt with each block depicting the major events in his career -- his marriage -- birth of children -- various places he lived and worked -- tours of duty in Iraq -- etc. However, my ideas and my capabilities didn't coincide so I chose to make my quilt simplistic in design.
I hope you gain some ideas from this. I cannot give any suggestions specifically on how to use his uniform fabrics, but I know with time you will be able to come up with the right pattern. My best to your family. I am here if you have any questions.