It's hard to give any useful advice other than to get an attorney with experience in such matters to assist you. We aren't getting to hear CPS's side (and they certainly aren't going to tell you everything) - the REASONS that they felt that the children were at high enough risk for abuse or neglect, or what they felt already demonstrated abuse or neglect, to the point where they removed the children from the home. Removal for CPS is NOT the optimal action - believe it or not they'd RATHER keep families together (sometimes so much so that children who SHOULD be removed aren't). They don't just go in and grab kids because grandma says that dad has mental health issues. Half the people in the country have SOME type of mental health issue - and your husband appears to be getting regular treatment, therapy, meds, and assistance - so his schitzophrenia in and of itself most likely wasn't a single circumstance that prompted CPS into action.
Who knows what the grandparents SAID was happening (whether it really was or not) - and who knows how any possible issues with the children (suspected autism) might have come across to evaluators. Behavior, or lack of behavior, in young children isn't an exact science - some evaluator could have interpreted any strange or abnormal stuff with the kids as being more than it was. In the big picture, many children wish there would be MORE erring on the side of caution, but this is something that will come out in the hearings, where your attorney will have a chance to address any concerns.

