When the groom's grandfather is deceased, who is the best choice to do
the scripture reading?  Is his brother (the groom's great-uncle)
preferred over his son (the groom's uncle)?  Or is a step great-uncle of
similar age better?  (The groom's mother remarried and has an extended
"new family".)  The groom's mother's family is Catholic, as is his
fiance.  His father's family does not have a recognized affiliation.

Hmmm?  I don't know of any wedding protocol that suggests that the
groom's grandfather or the oldest male member of his family doe the
scripture reading, though it is a nice choice if the person wants to
and the couple wants him to.
I would leave the choice entirely up to the couple and hope they chose
someone whom they really wanted to be involved in the wedding  - but
also with respect for persons who would be hurt if they were not
included.  More than just one person can speak at a wedding, not just
reading the scripture but also appropriate texts from other sources  -
or their own words for their hopes for the couple.

I was raised Catholic, and I don't think there is any protocol on who
does the reading.  How about a friend of the bride or groom or a
favorite cousin.

I'm catholic and have been to pently of weddings, I don't believe
there is a protocal.
BUT it actually depends on the couples nationalities .. as I've been
to irish, chinese, australia, filo etc..
AND they all have different customs.
While there is no exact rules for reading scripture at a wedding, it
is normally done by adult catholics - hope that narrows it down a bit.