My father wants to be honored...? Which sounds better?

You should use the name you are happy with using. If you use something just to satisfy someone, you will be thinking, as the child grows, 'why didn't we just use the name we wanted to use.' If you want to use Elliot Heath then by all means, use it. The men ( Father and FIL) should be mature enough to be happy with whatever name you choose. After all, he's their grandson and even if his name was Scooby-Doo, they should love him for him, not the fact that he has their name.