I am of the opinion that hitting anyone is abusive. Having said that there are many jurisdictions in North America that do not have laws against "spanking" children. It is unfortunate as I believe all that teaches a child is that violence is acceptable.
I was in a similar situation as you with the difference being that I am a father and it was my children in those circumstances. My JW ex-wife subjected our children to years of abuse and much worse than hitting them for not saying a prayer before eating. There were about a half dozen occasions where the children suffered broken bones and worse their mother made them wait hours, and in some instances, days before getting them medical treatment. The authorities were not only contacted by me but by school principles about what was going on. Unfortunately my ex (also a control freak) had the kids frightened to stand up for themselves. Ultimately the authorities could do nothing as the children would refuse to reveal to the authorities what was really going on. When push came to shove they would back up their mother's story. She even drove her car into them because she was mad - one suffered bruising and the other a broken bone. Her excuse to others was "it was an accident I am their mother I wouldn't do that on purpose to my own children".
It was not until the children got older that they gained the strength and courage to stand up. Eventually the Police intervened along with Youth Protection. She has been diagnosed with a pschological disorder.
One thing I can say is a caution to you: If your grandson is not fully prepared to go the distance in breaking with his parents now then your complaints to Youth Protection will be left as just that. Worse, your son and daughter-in-law may seek to cut you off completely and/or move without giving you a forwarding address. Your grandson will then be without you for support. If you choose to take in your grandson and not return him home be prepared to be potentially charged criminally. Everytime my children visited me they begged and pleaded not to be returned to their Mom but even I as there non-custodial father would have been charged criminally and then lost visitation. This avenue may only be explored as a viable option if the child has the courage to come forward to the authorities with what is really going on with his parents.
In short you are between a rock and a hard place. My heart goes out to you and especially to your grandson. One thing you can count on is if you take a stand the excuse will be that he is a teenager with a very restricted lifestyle (not illegal) and he is rebelling. Only you know how serious the situation is but if it is not life threatening I would suggest making attempts to affect the parents attitudes through positive role modeling. I am sure others will criticize this because JWs are so set in their ways and they take direction from Brooklyn on child rearing but the risk is that you lose contact with your grandson completely. At 15 he is still young to stand up against them and many authorities will eagerly buy into the "teenage rebellion" excuse.
Maybe you could do things which are not threatening to the parents like inviting them over as a family to dinner. Try spending as much time with them as you can as a family and that way you can keep an eye on things while also making attempts to expose them to positive parenting.
Good luck and God bless.