It's been my experience that I can never really know someone else's motives... and I used to make myself crazy by trying to figure it out.
Keeping a copy of the letter makes sense, as it discharges a debt, and is proof that the lender considers the debt paid in full.
I think its admirable of you to keep J's grandparents connected to him. That relationship is very important to all parties and you're a really great MOM for supporting it.
If it makes you feel better, tuck the $$ in the envelope along with the letter and put it in your safe place. You never know when it will be JUST the perfect amount for something special or unexpected!
Hugs - good to see you again
~ Cat