Good questions. I'd save them as medium to high quality JPGs, about 800 pixels high should make them really visible. Even 700 works. That should make them all under 150K each...many even 50-75K. I'm glad you asked: please no nudity here. Upload as many as you want, even if it takes several albums. Title each item and use tags--they make searching easier.
Why don't you create an album of photos here and ask for opinions? It will help build the credibility of you and your collection. If your grandfather got them personality, there shouldn't be any that look like obvious forgeries. If he has some that weren't signed in front of him, that's a different story.