If you sign a contract for deed, give the seller $10,000 down and continue to make the monthly payments for 2 years then the seller decides he wants to give it to his grandson. Are we out that $10,000 and all the remodeling we've done?

Depends on the terms of your contract. But generally, as long as you are fulfilling your end of the contract the seller cannot renege on the contract. If he does you can sue him for the return of the deposit and the cost of any improvements you made to the property.

Yes, it is a contract so unless you default in it, he just can't give it to anyone. In your case I would be sure and register the contract for deed at the court house with the recorder of deeds, that would stop any deed transfers.

Also if somehow it tries, you can first sue to stop him, second you can sue for all your money back, all payments made, all down payments and any money you put into the home.

But what you need to be careful about is any clauses that allow him to find you in default, so it is time to try and borrow the money to pay him off.