Couple of points here:
1. Agree with "but worth it this time", doing anything for grandchildren is a pleasure to do. I have 4 myself and I enjoy doing anything for them, especially taking them for ice cream.
2. Regarding cutting the letters twice; if starting with a drilled hole not much bigger than the blade - couldn't the cutout letter be used?, or, couldn't the letter and back portion be cut simultaneously if stacked?
I've never scroll sawed so just looking for knowledge here.
Nice work, I'm sure the grandchildren will be very happy with these.