I love the name Augusta now, and I have a lovely student with the name. I don't really see how being born in August would make Augusta honoring your grandfather.. For me its a bit grasping at straws, but hey thats just me.
His name is Americo, so the feminine would be America. I'll pass on that, thanks lol. Augusta would be the best way for a female child to honor him [that I've found at least]. =)
I think it's a GREAT way to honor him. You aren't honoring his name, you are honoring him as a person. If his person was born in August and Augusta resonates with you, I think it's wonderful!