Can the wife of a person with power of attorney restrict another family member on what they can and cannot do?

If your grandfather is still in his right mind and can voice what he wants done then he can also change his power of attorney. Since your grandfather is in the hospital, you might want to speak to a counselor there and see what they have to say. There is something called "elder abuse" in which younger members in a family or even people outside the family take advantage of a situation and steal possessions or restrict the elderly member's rights. Elderly people can be protected against these types of things but you need to talk to someone who knows your grandfather and the situation. Hospitals sometimes have professionals to help.