I have bodies buried because someone playing a dirty game was dusted by someone playing a dirtier one? Dogs, fleas, birds of a feather, scorpions and frogs.
Unless there's more to the story, the only person who is 100% innocent in all of this is Chancellor. He didn't ask to be born. He didn't ask for his parents. He didn't ask for his life.
But he is still deserving of respect. If HE says he wants nothing to do with Rae, then that should be respected. The grandmother trying to shield him from Rae will lead to rebellion and a lingering resentment if that is not his own wish.
Keep custody away. Don't block any meetings whatsoever. Again, that kid deserves the chance to be a man towards his sire. And Rae deserves to be rejected by his son himself, not a vengeful (grand)mother.