Johnnie, I'm not sure exactly how to say this, but much of my sympathy and concern bypasses Grandson #1 and lands squarely on Grandson #2. He has shared, knowing the probable outcome, a desperately personal description of who he "really" is with the family. From this, he's been blamed for the #1s violent outbursts? And it would seem from your comments that he's been devalued by sharing this information as well.
He's still the same person, the same baby you watched grow up, the very same person you've always loved. This is who he has been the whole time, but for the first time, you know something that he's kept hidden, however well. Please spare some thoughts for him, too, in the emotional upheaval that the family is experiencing.
I know that's not what you wrote about, and it is probably my most controversial threadjack ever, but I just yesterday had a friend I've known since middle school tell me she's gay, even though she's lived a hetero life, including marriage and kids, but realized she's always been this way and refused to acknowledge it until after her husband left her. I feel very sorry for her, thinking of how it must be to know you are different, to know that people, even family members, will ostracize or become angry with you, about something you are powerless to change.
Peace to you and your family.