Licinius,
You are correct about the value. Nobody is going to college on the sale of that rifle. But it is still better than some I have seen here. At least it looks to be all original.
That rifle was made in 1901. So, depending on your age and the birth date of your grandfather he may or may not have been the original owner. It looks like I could barely make out the caliber being .32-40.
The condition of the rifle is quite poor. There is no denying that. Most of the bluing has turned to a brown patina and has been removed from the right side of the receiver. This was most likely done with some steel wool in an attempt to remove rust sometime in the past. You can see the last bits of bluing which were protected by the screw heads.
It is interesting though that the left side of the receiver did not suffer the same fate. Here the bluing has certainly turned brown but it is almost all intact.
In this photo of the butt plate and right side of the stock it is obvious that the plate has never been removed from the gun but most certainly the original varnish finish on the wood has been partially removed. Did your grandfather's name start with a "D"?
Most of the varnish finish has been removed from the fore end on both sides but still the wood has not been overly sanded and the fit at the metal is prety good.
The barrel and magazine tube have not been steel wooled but they do show a good amount of wear and the bluing has almost totally turned to patina. The high spots are worn clean especially the fore end cap.
I would rate this gun overall to be in about 40 to 50% condition. While it has definitely been altered it hasn't been so badly sanded that the wood fit is terrible. The caliber adds some value in that it is relatively rare if I read it correctly. This gun is worth about $800 to $900.
I hope this helps some.
Thanks
2bit