What a lovely quilt. I don't come from a family tradition of quilting so I have none from my family -- but my hope is that those that come after me should be taken care of. While yours has some condition issues, it isn't too far gone. Sometimes the only thing that can be done is to use it as batting for a new project...
You could simply applique either vintage or Aunt Grace fabrics over the really gone fabrics, and then reback it with new fabric and quilt it through all layers in a 1" or so grid to stabilize it all. In terms of quilt restoration (and here it is the memories that are most important) a quilt is only as old as its newest piece.
For the blades that are not completely gone but are decaying, you can carefully zig zag through the affected fabric in a similar thread color.
It pains me to say anything about cutting apart, but depending on how many grand/great-grands etc, and how many whole blocks you have, you could frame squares and give them to the rest of the family along with a note on the back about Grandma/this quilt.
Similarly, you could sacrifice a couple of the worst blocks to fix the ones that only have a blade or two that need replacing by very carefully taking some of them apart. I'd keep the quilt in the existing layers and then reset the blocks on point with fresh bubblegum pink lattice and/or hourglass blocks (like the sashing squares) around the border to keep it a bed size.
It's sad to face and I think part of the beauty of a quilt is that they do break down over time if you are going to use them and enjoy them -- but in my design philosophy that's what I make them for is to be used.