You are right in identifying O'Connor's emphasis and focus on the grotesque in this excellent story. There are certainly plenty of moments you could focus on, but you also might like to think about the way in which grotesque images are actually made to be rather humorous in some places as well. One excellent example comes in the second paragraph, when we meet Bailey's wife. Note how she is described:
...a young woman in slacks, whose face was as broad and innocent as a cabbage and was tied around with a green headkerchief that had two points on the top like rabbit's ears.
There is something immensely amusing about this description of Bailey's wife's face as a "cabbage" and the way that she resembles a rabbit.
There is something grotesque in the way that the children's excitment about being in an accident is juxtaposed with the damage done:
She was sitting against the side of the red gutted ditch, holding the screaming baby, but she only had a cut down her face and a broken shoulder. "We've had an ACCIDENT!" the children screamed in a frenzy of delight.
And then lastly, you might like to think about the final image we have of the grandmother, dead on the floor, after she has been shot:
Hiram and Bobby Lee returned from the woods and stood over the ditch, looking down at the grandmother who half sat and half lay in a puddle of blood with her legs crossed under her like a child's and her face smiling up at the cloudless sky.
There is something in the way that the smile of the grandmother and her the way that she is lying in a "puddle of blood" makes this image perhaps the most grotesque in the story.