Since we never actually hear the bitchy Grandma on the toy phone is she really reaching out to Billy from beyond the grave or is at all in Billy's head? And is Billy's mom herself also suffering from some kind of delusion when she claims she can hear the mom breathing?
I'm pretty sure the grandma is there the whole time. In the end her son gets on the phone and pleads with her to give Billy back. Shortly after, he's revived.
What a terribly selfish woman she was. I don't care how much she "loved" him, she knew full well he had to die to be with her. That's why he ran in front of the car and almost drowned in the pond. She told him to!
I'm sure she was actually on the phone, as people seemed to be able to really communicate withe her (like the Dad begging her to give his son back). Plus it wouldn't be very Twilight Zone-y if they were just delusional.
Serling does say in the outro "to be believed or disbelieved depending on your frame of reference." He expresses similar sentiments at "The Grave" 's coda: "you take this with a grain of salt or a shovelful of dirt, as shadow or substance, we leave it up to you." Whether the viewer is partial to a supernatural explanation or a non-supernatural explanation I don't believe it's an open-and-shut-case in either instance.
While the Grandma is odious the son is no prize either. What's with how he manhandles his wife whenever she expresses understandable concern over Billy's relationship with his Grandma? The way he grabs her shoulders has got to hurt. Not only is the poor wife dealing with a deranged crone but also a deep-in-denial husband who goes to such lengths to keep his wife from airing her unflattering thoughts about his mom by putting his hand over her mouth. Sheesh.
I found the dad's plea to his mom at the end to let his son go hardly moving since throughout the episode he seems like your typical '50s TV dad: partial to employing subtle and not-so-subtle bullying tactic to make sure his better half sees things his way. It would have been better if the voice of reason throughout the episode -- the wife -- got on the phone and channeled Ripley from "Aliens": "Get away from him you Bitch!"
One thing that always strikes me as odd is the grandma saying "I wish I could take you with me." as she is dying - not a very cool thing to say -and in front of his parents, no less. As for the dad, however one feels about the character, I think his speech into the phone at the end is some of the best acting in the series.