I tend to be on the same side of tear it all down, make it better than new, and then assemble as I go. Depends really how involved you planned to get and the condition of the motorcycle really.
You can unstick an engine, but, wouldn't you really rather disassemble it, inspect everything, replace what should be, and then put it back together? Since it was his G-dad's bike, I believe he will keep it a long while. So time and money invested into this way is somewhat moot. Make it perfect, Brandon! Make your family proud, and keep that bike for as long as you can so your offspring can enjoy it.
When you attempt to rotate the crank, do NOT use the bolt under the points cover! It will shear off. Use the bolt under the stator cover instead. And if ATF doesn't free it up, pour some kerosene into the cylinders and light them afire. (Outside only
) and let the heat cook the rust from the rings. Been there, done that. Expect to bore the cylinders and new pistons/rings as a result of the rust.
Ask me how I know-