This is an old thread but may still be relevant for some. I had a step-grandmother (GM had died before I was born and my grandfather married again). She was always Auntie A to me, not any kind or Grandmother name. She wasn't a gran type anyway and I never really thought of her as a grandmother.
On the other hand I have a friend who is a step-grandmother and is known as Granny M to her step-grandchildren, which is what she wants and she acts like a granny!
I suppose it depends on the family and the type of relationship the children have with the step-gran. If the "real" gran on that side is still alive, I can see that calling by first name may be preferable and avoid confusion is mind of child. Of course the same issues apply to naming of step-parents.
Fashion for short, overweight woman