I would definitely not have anything done to the revolver itself other than a good cleaning and perhaps a coat of Renaissance Wax on all exterior surfaces. I would also have a good leather treatment on all of the leather gear to preserve it. Then I would display the whole thing proudly but securely... it would be a tragedy to have that piece lost or stolen because it was too easily gotten to by the wrong person. Congratulations on having a wonderful piece of family history. Preserve it proudly and pass it on to a prepared next generation who will love it.
Froggie
PS BTW, I definitely would take it out and shoot it on some special occasions (his birthday, anniversary of his passing, special holidays, etc.) and let that old workhorse enjoy being out again. I personally would feel honored to have that connection to my grandfather!