Having begun the £3million pro-celebrity event with an incredible Tour record-equalling 60 at Kingsbarns, the 24-year-old South African marched five strokes clear by reaching 17 under par at halfway.
When he putted for eagle on the 357-yard last Grace had a chance to match the circuit's lowest-ever 36-hole total in relation to par, but he happily settled for a two-putt birdie and so the mark set by compatriot Ernie Els at the 2004 Heineken Classic in Australia still stands.
"I just don't really knows what's going on," said the Pretoria golfer, who was outside the world's top 300 less than a year ago, came through the Tour qualifying school and now has a chance of an incredible fifth victory of the season.
The fourth came last Sunday in his home country's winter series and was slightly overshadowed, of course, by Europe's miraculous Ryder Cup comeback.
"A win is a win," he added. "It gives you confidence and puts a fire in you. I'm still just running with it."
Dane Thorbjorn Olesen and Swede Joel Sjoholm are in joint second place and you have to look a long way way down the leaderboard to find many of the big names.
German Martin Kaymer, the man who sank the all-important putt for Jose Maria Olazabal's side in Chicago, is doing best of the three returning heroes, but he is down in 56th place on three under - 14 strokes adrift.
Swede Peter Hanson is one further back, but Paul Lawrie is joint 129th on one over - and only the top 60 and ties survive the cut after Saturday's third round.
The one thing in their favour is that they still have St Andrews to play whereas Grace has Carnoustie to come and that is by far the stiffest test of the three.
Also in a fight to stay around for Sunday's closing 18 holes at St Andrews are Open champion Ernie Els on one under, twice winner Padraig Harrington on level par and last year's Open winner Darren Clarke, who is alongside Lawrie.
The Scot is playing with his 17-year-old son Craig and did not mind admitting that the scratch-handicapper outscored him in the second round, albeit off forward tees.
"He played lovely and was four under on his own ball - I'm very proud of him," said the 1999 Open champion, who had to be content with a two under 70 himself.
Paul Casey is another on three under, but the former world number three will remember the day for two unusual incidents - a dog running off with his ball and swimming star Michael Phelps holing a 50-yard putt.
Casey was on the green in two at Kingsbarns' long 12th - his third - when the dog took the ball "off up the hill toward the 13th tee".
He added: "I had that moment of panic where I thought I'd have to play it where Digby - he had his name on his collar - left it, but we placed it back as close as we could to where we thought it originally was".
Grace had no such dramas, but was glad the format allowed him to switch courses following his 60.
"It would have been a hard situation if I had to play Kingsbarns again after shooting lights out. Getting to St Andrews I didn't know what to expect.
"I struggling a bit in the beginning, but then my putter started getting hot again."
He had four successive birdies around the turn.
Sjoholm matched the round, while over at Carnoustie Olesen had six birdies and three bogeys for a 69.
Leading British player is Graeme Storm, round in 66 at the Home of Golf to reach 10 under and joint fifth place.