Your granddaughter doesn't need a "reality" check -- she is LIVING it. You are way past the "scared straight" stage, because your granddaughter is already in too deep. This is not "rebellion", because she doesn't acknowledge that the rules apply to her.
Unfortunately, what your daughter needs is an intervention, along with a stay at an adolescent rehabilitation center, and possibly an extremely strict boarding school for behaviorally-challenged kids. I hope the boy was arrested for child molestation, and that her folks (or you) press charges -- that will get HIM out of the picture for a bit. But your granddaughter is in severe need of counseling, because all of her behavior is crying out for attention.
And meanwhile, you, yourself, probably need to start attending Al-Anon to understand how to deal with her, and enocurage her parents to do the same.