Anne,
The Valuation Revision records in Dublin should tell you who owned the land your grandfather had in Donegal, up until the 1930s anyway. If he was renting, then it’ll show who the land owner was and if he had purchased it under the Land Act (or by any other means) then it will normally show that too. Usually there’s a purple stamp saying “L.A.P.” and a year, indicating the property had been bought under the Land Act, and the year that occurred.
In the event that no-one has taken possession of the land since his death (or earlier) it wouldn’t necessarily revert to the state. The state has powers to buy land compulsorily eg for a new road, and if someone is intestate with no heirs then ownership can also revert to the state, but as long as there is someone alive with a claim then the state is unlikely to be the owner.
Registering ownership of land in Ireland has only been compulsory since very recently, and so you may need to do a bit of work to establish ownership today.
Do you know he still owned it when he died? Perhaps he had sold it, knowing he was unlikely to use it again. Is there someone using it today? If so, how did that come about? Did they buy it or have they taken adverse possession of it? In which case they might have a legal claim if they have occupied it unchallenged for a certain period of time.
Obviously you need to consult a solicitor who knows about Irish land law and take their advice. I am sure that googling solicitors plus Donegal town or Letterkenny will throw some up.
For me, the starting point would be your grandfather’s death in 1964. Did he leave a will? If so, there may be a probate file in Scotland. What did the will say? Did he leave the land to anyone? If he didn’t, did he appoint a residual legatee? A residual legatee is the person who gets whatever’s left after all the other bequests are made. If he died intestate then his estate should have been disposed of in accordance with Scottish intestacy law (ie split between his children and any other eligible dependents). Chances are therefore that, whether they know it or not, the land in Donegal has passed to either a residual legatee or to his family under intestacy law.
This is what the Scotlandspeople site says about wills for someone who died in the 1960s:
Wills registered between 1925 and 1997 have not been digitised and may only be consulted in the Historical Search Room at the National Records of Scotland. The printed Calendar of Confirmations is the yearly index to these wills. See the National Records of Scotland's guide on wills and testaments for further information.