I can appreciate the discomfort you had while having this dream and the upset following it. I imagine the vivid nature of the dream — with the details — makes it particularly uncomfortable.
There are a few elements about the dream that I think are important. First is the way the information comes to you. You are witnessing a moving picture in the dream of you and your grandfather, and that your grandmother and her son (your father) are trying to distract you, which may or may not have been intentional. You then have other seemingly unrelated dreams realizing afterward you “…had seen something incredibly disturbing but again with no big reaction.”
Dreams often come in clusters trying to help us by giving us the message in different forms. The central element in your dream is that you and your grandmother and your father have “seen something incredibly disturbing.” What’s more the dream specifically leaves out your sister, mom or any maternal family members. This leaves you with three important themes coming from the dream: 1. Seeing something disturbing; 2. Others close to you seeing it too; 3. Still other close to you not seeing it and not being aware of it.
Dreams can use many ways to get your attention. Was it using your grandfather’s inappropriate behavior in the dream as a way to symbolize a disturbing experience? Or was it revealing a more specific issue of molestation?
I’d recommend keeping a dream journal and finding a therapist with both dream interpretation skills and issues involving incest. (The find help tab at the top of the page can help you find someone in your area.) This way you can have a professional guide you as you uncover the dream’s meaning. Doing so can keep you from jumping to conclusions on the one hand, and overlooking something that needs to be dealt with.
Wishing you patience and peace,
Proof Positive Blog @ PsychCentral