Pretty much all has been said about the refinish job. It ruined the collector value.
Being an arsenal refurb might explain the non-1911 hammer (it's a 1911A1 hammer with the narrow spur if I see the pics right), but I'd suspect it, the slide stop, safety and grips were probably replaced later to make it functional.
It's a shooter, so go ahead and take it to the range & enjoy it.
Your grandpa might have purchased it surplus after the war, but as Jim posted, it wasn't purchased from the government. Or if it was his issue 1911 maybe he just "dufflebagged" it and got the tale out that it was purchased.
Hard to tell, and it's too bad you can't go back in time and ask him.