When I was a kid in the seventies, I got a set of walkie-talkies for Christmas one year that each had a Morse code button. I think I had to press the PTT switch before pressing the Morse code button. I had memorized the Morse letters, for instance "A is dot-dash", and so had a few friends, but none of us had actually been taught how to send clean code, or how to copy by ear, so the button was completely impractical; it was only cool for five minutes at most, and was mostly ignored after that. Of course the walkie-talkies were complete junk, and didn't work reliably from the front yard to the back yard, so they were really only useful for pretending to be GI Joe, rather than actually communicating with friends more than a few feet away. They used a CB channel; from time to time we'd hear someone with a real radio, who never seemed to hear us. Ah, those were the days ;) Modern FRS radios work so, so much better.
For someone with the right knowledge and skills, designing a circuit like you describe would not be so difficult. Rather than disassembling the radio or a microphone, I would put the circuit in an external enclosure with a cable and a plug that plugs into the radio's microphone and PTT jack(s). I'd also equip the circuit with a jack for the Morse key. An Altoids tin could serve as the enclosure, or you could buy something fancier, or gut some other device and use its enclosure.
The heart of the circuit would be the audio oscillator. If you search the web for
code practice oscillator, you will find many examples of suitable circuit designs, or even kits that could possibly be adapted to do what you want. Probably the simplest way to do it would be to buy a code practice oscillator kit and build it, and just put that in front of the walkie-talkie, with no electrical connection between the oscillator and the walkie-talkie. Of course a proper circuit that plugs into the radio would have more panache, but you would need to solve many more little problems along the way.
The PTT would be a little more difficult. You could either train the child to push the PTT button, or build a circuit that would trigger it automatically and keep it open for a short time, perhaps one second, when the Morse code key is pressed. Try searching for
one-shot multivibrator or
monostable multivibrator for circuit examples.
I suspect that the circuit would be as much to get you back into electronics as it would be for your friend to play Morse code with his granddaughter, which is well and good. Just be aware that it takes several hours of determined study and practice to be able to send and receive Morse code even at 5 WPM, the lowest practical speed. (That I know from practical experience.) Of course one could always devise a simple code such as "three dashes means it's dinner time, four means it's time for bed". I'd guess that many children would prefer to skip the telegraph key entirely and just speak into the walkie-talkie, or send a text message through a mobile phone. I'm not a parent, but I'd guess that motivating a kid to learn Morse code is like trying to motivate a kid to learn to play piano: good luck.