I have similar issues, but not to the same degree.
1. Are your children asking these questions, or are you concerned that they will? Children are usually very accepting, especially of someone that they love.
2. I believe that it’s okay to tell children that grandma and grandpa aren’t as religious as we are. You can explain why you feel religion is important and that you live in a community where you and your children can have friends with similar religious values. Grandma and grandpa grew up in a different environment, went to different schools, didn’t have such a great community etc., but cared very much that their children should be more religious than them.