It depends on whether your husband is on the fence because he misses church, or because he wants to appease Grandma. You've already done something to appease the parents, and I understand why you would do that. It didn't seem like a big deal, it made them happy, the children didn't know the difference, etc. A lot of us do things like that regarding weddings, holidays, baptisms, and so on.
Grandma has tipped her hand - she's looking toward the approaching end of her life (which could be a year or could be 20, but still, she's in the last chapters), and she's concerned about not seeing everyone she loves in heaven. She believes the teachings of her church, that not everyone will go to heaven - and she's torn by the teachings of her church which have sustained and bolstered her all these years which now may actually separate her from those she loves. I'm sure she is totally sincere in her belief. That doesn't mean you have to share it.
Baptizing an infant is one thing. Sending an 8 year old to catechism and mass and first communion after 8 years of doing nothing is hard enough. It's impossible if the parents are doing it to please Grandma. It also really denigrates Catholicism, frankly, by giving the message that "I know it's pointless and painful, but you have to do it even though I won't."
On the other hand, if your husband is really looking for a chance to go back to the church and he has missed it, there's nothing wrong with one parent taking the child and both of you saying that people have different religions in the family. You have to be comfortable with what she's going to be taught, though, even if you don't attend.
This is your husband's grandmother. He's undecided about whether to do this. It's his issue to deal with. It's not up to you to find the words to deal with Grandma because you will "be the problem" in her eyes if you "prevent" her grandson from doing what she thinks God wants. I think he has to decide what he really wants, and be willing to face Grandma. If he's only doing this to make Grandma happy, that's not going to work at all in your home.
There's nothing wrong with a child attending church with Grandma to see what Grandma finds so fulfilling and wonderful. However, if Grandma's going to spend the time twisting Grandchild's arm, then it's a bad idea.
I think your husband (with your support) has to find a way to tell Grandma that you all aren't Catholic anymore, and that you know how important church is to her and you are happy for her that she finds such strength and purpose in her religious life. You can explain your objections to the church or its teachings, but that may make things worse for her. He may just have to tell her it's not up for discussion and that, while you have no desire to make her unhappy, you hope she has no desire to make you all unhappy either. If the 8 year old wants to go to church anytime, you will allow it or take her, and she can always find the religion of her choice when she is an adult. Assure Grandma that you will teach your child to honor and respect the religion of her grandma but that it cannot be forced on her. At some point, your husband may have to put his foot down if he is not really interested in church but more in avoiding conflict with Grandma.
One thing about this new pope is that he seems to be a bridge-builder, and one who is more focused on spreading love and charity to people of all faiths. He seems to feel that religion should not be a dividing wall among citizens of the world. There are some lapsed Catholics who are feeling a little more welcomed. But that doesn't mean everyone has to go back if it means nothing to them.
FYI I converted to another religion some years ago. Some people in my family had trouble with it, and some were thrilled that I was happy and embraced the chance to learn more. But in the end, I had to do what was right for me. I've never regretted it, and I feel sorry for those whose faith is so precarious that they can't be accepting of others.