I would give her some money and say 'here is £X to spend on something frivolous as you've been working so hard'.
As others have said, the clever ones get the reward of the good results, so it seems to me a double whammy for those who find exams difficult if rewards are also conditional on doing well.
I suppose it depends on whether you have other grandchildren, though. If she is the only one, then it's less important, as you won't be setting a precedent for the others to live up to, but if there are others, I'd consider how they might feel down the line.
As for the hug - don't tell anyone, but I'd be inclined to ask her if she'd like one, and if she would, go for it