therookie,
welcome to
RP.
as others have already stated, yes, this is very restorable. and, as you've already seen, there is some question or preference in how the final shld look. do you leave the sepia or make it straight black and white. so, you might want to consult with your gramps as to his preferences. and, even if you work on it in black and white, which tends to be easier (NOT grayscale), you can always make it sepia as a final step, if that's what gramps wants.
the first thing i did was 'scratch removal', just to get the major scratches out of there first.
the next thing was a bit of balancing in the whites and darks. this was a bit involved. i used a 32 band gray map plugin, curves, black and white points, and brightness/contrast for the most part.
the next was cleanup. remove most of the remainder of the scratches and some of the jpg artifacts. for this i used a bit of clone, push and 'digital camera noise removal'.
the baby had to be treated separately. the top of his head was blown out white. so, i made a new blank raster layer and airbrushed in some shadow/hair on the top part to define it. then gausian blurred it very lightly and erased any little errant bits.
the man's hair i treated similarlyto the baby's head. blank layer, airbrush and then 'rake' with the push brush. again, a bit of gausian blur and erasing.
somewhere in all that i also added a bit of the 'clarify' filter to give a bit more definition here and there. i also had a curves in there that added back a bit of sepia.
for the final, i copy merged all to a new layer, set that layer to 'luminance' and turned on the original background layer. this brought back a fair amount of the original tone to the image (from having taken it to black and white).
i also cleaned up the one edge a bit. and somewhere in the clone/push stage, i had to remove a bit of the background as it was quite distracting to the woman's face.
from what little was left, i think the background was one of those painted landscapae backdrops.
oh, and i also resized to something a little more viewable.
craig