While I like the idea Grandpa's jeans and shirts mixed into the quilt, I have the same questions about using the denim. It would make such a great John Deere Farmer's quilt!!! Not saying it can't be done, but that you would need to think of the realities. I think you already were ... or you would not have started this thread.
If you are going to be quilting the denim, there are Jeans Needles that might do the trick.
As an option to keep the same jeans sense, there are some regular quilting cottons that look like denim.