I think use of the word inappropriate is bound to hurt some feelings. I'd just tell her she couldn't/wouldn't wear the shoes but that you found some others to go with the beautiful dress.
But if the OP believes it to be inappropriate I think that should be communicated. It could be a great learning moment for the grandparents. Or it could be a time when they get defensive and have their feelings hurt. It's up to them how to take it, and I don't think the responsibility falls upon the OP to be less than truthful to protect their feelings when doing something that's pretty messed up.
I'm all for open, honest communication for sure. I guess when it comes to gifts or attempts at acts of kindness though, I tend to err on the side of excessive politeness.