I think it's best to let them decide what they want to be know as. And FWIW I totally get that your Dad is already Pa, my families a bit like yours. My sister had a different father to me (he died when she was young) and her kids call my Dad Pa. Then we both have a step-father, who our kids call Grand-dad. My Dad's partner didn't want a grand parent name so she goes by her name. Our mum died when my sister was pregnant with her first and wanted to be known as Nona, so that's how we refer to her. DH's mum is Mimi, her husband is Opa. DH's dad is Grandpa and his wife is Grammie. You confused yet?

I guess I'm just trying to make the point that there is no normal or traditional these days. Becoming a grandparent is a very special thing (whether it is through blood or love), I think it is only fair to let them as individuals decide how they want their grandchild to relate to them.