Difficult situation for you ...but I do agree with the sentiments expressed here as to whether your husband has an early onset dementia ? My husband was diagnosed with vascular dementia (mild at the moment) along with a personality disorder which is bordering on the autistic spectrum .....I have only known him since he was 68 and a widower when he was very active and very lucid, coping with the personality was difficult but his mum (then aged over 90), his brother, sisters and daughter DID ask me if I really knew him ! They knew about his personality disorder ,,,but I thought I knew better ! It would be a good idea if you can persuade him to get along to the GP and ask for some Mini Mental State examinations referral ....you could have a word with your GP (obviously they will not discuss him with you, but you could mention your concerns and ask if he could be 'called in' for a general MOT ! My husband was and still is, in denial ..he is not allowed to drive any more because of his dementia problems, plus two mini strokes and only one good eye..he still insists he can though ! BUT when your grand childs life could be in danger or there is a risk of serious injury, you must try to get him along to the doctor ....meanwhile take a look on the Alzheimer website ...there are lots of forums where you can interact with people with the same problems ...first hurdle to overcome is his denial/reluctance ...might need a few little lies or persuasion. Another aspect of my husbands illness is blaming me, or anyone else for his problems ....even when I am not at home for half an hour, whatever has happened is always my fault ...luckily, although I do sometimes get upset I just ignore the accusations ! I TRY (it is difficult !) to understand that a lovely man is frustrated at no longer having much independence and having to virtually ask me to do everything ! He no longer understands money or why we never have any (because he spends it !) or cannot accept being told he must not climb ladders with an electric hedge cutter !
Whether you mention this to the parents is up to you ...perhaps you could say to your husband that you are worried now that you are both getting older if it is in the best interests of the grandchild to continue with any child care .....thus putting the onus on both of you and not blaming him !
Good luck !