This is not a problem, it is an opportunity!
You have something that can be copied easily, not like a vase or chair or piece of original art.
First, regarding the old photo:
Have multiple, professional, copies made of the photo. Do not use Kinko's or other one-hour-type places. Look under photography in the Yellow Pages and find a reputable photography restoration/conservation business!! Call a local museum or college that has a photography department if you want some recommendations. Do NOT use anyone that will send the photo "out of house" (to another conservation source) to copy it.
The copies can be smaller than the original, which would be easier to frame and display. You don't have to make copies (or, pay for framing) for every grandchild in the family. Just give the copies to the relatives that will appreciate this gesture (they can choose to frame it or not). Your fil would be happy in knowing they, too, have it.
These same professionals can, often, also help with conservation of the original. If it is in the original framing, over 25 years ago, the photo was probably taped in place and that tape could damage the photograph. It should be in acid-free corners and have acid-free backing and matting. If glass is resting directly on the photo, that can be damaging to the photo (old photos need matting!). And, the current glass should be replaced with conservation glass. The frame can be left, as it looks, but have the corners checked for signs of separation and have them repaired properly, if needed. I wouldn't do anything else to the frame, let it keep its aged look. You simply want to protect the photo, not change it!!
After the original has been properly conserved, give it back to your fil, as your gift to him. Tell him you want him to continue holding onto the photo and enjoying seeing it and knowing its history. Ask him to write out as much as he knows about the image (where, when, who, etc.). If he can actually write, it is nice to have the description in his own handwriting, rather than typed (for future generations). If he can't, offer to type it out for him, asking everything you can think of about the picture. Make copies of his description and give one to everyone that is getting one of the copies.
Now, you have multiple copies of the photo to give to ALL the relatives, male AND female. EVERYONE has a copy of the photo to display (or, put in a safe place), your fil has the original (and, it safer condition than before) and nobody has hurt feelings. YOU come out smelling like a rose, because your thoughts were about keeping the image in safe condition and alive for everyone in future generations (and, not about who gets what when...).
Win-win for everyone.