"That is my grandmother."

Translation: ʻO ia koʻu tūtū wahine.

[AnCatDubh]

What’s wrong with kela/kena in this case?

[tnAu8]

Nothing. It should accept both.

[tnAu8]

“ ʻO kēlā koʻu tūtū wahine” should be accepted, especially to differentiate “that” from “he/she/it”