Quote Originally Posted by Weimar Pluto Knight VII
Oh yeah. Okay, so maybe Shinra or Hojo cross-breeded a canine animal with a human before, and that's how we get Nanaki. Well, hmmmm. Nanaki is 48. If that was Hojo's doing, shouldn't he be retiring about now? Gast was his predecessor, and he doesn't strike me as the kind of guy who would subject humans to crossbreeding in the name of his experiments.
Well, you're forgetting that Nanaki wasn't the only kind of his species. His father Seto looked very much like him and it's not implied that there was any differences in them genetically, nor was it implied that Seto was incapable of speech. As far as the implications go, he sounded every bit as intelligent as Nanaki.

Personally, I imagine that "Grandfather" was either just a term of endearment in regard to Bugenhagen, or -- perhaps more likely -- possibly a title he bore the same way Japanese folks -- or Native American folks, which there seems to have possibly been a basis for in regard to the people of Cosmo Canyon -- would refer to their village's elder as such.