Should I be worried about low undergraduate grades during the COVID-19 crisis affecting grad school admission chances?
The situation is chaotic and it is difficult to make a prediction or give firm advice. Either path could be better than the other, depending on the judgments of others. 

However, one prediction that I can make with confidence is that universities sending out grades will also be sending out explanations that extraordinary measures were taken in extraordinary times. Furthermore those receiving grades and such will understand that the situation was chaotic and that the ordinary procedures need to be modified. 

If it were me, I'd probably opt for the grades rather than pass/fail. If necessary, I'd just explain that the general chaos affected my performance somewhat and the grades may not accurately reflect my potential. I'd suspect that letter writers would back that up. But that is partly because I'd have a history of excellent performance generally and not one that would be questioned in the absence of the current situation. (This is the hypothetical me speaking, not the real me.)

But the pass fail option can also be explained fairly easily that the risks were higher due to general disruption and you considered it the safer option as the rules were changing, making earlier assumptions invalid. 

I expect that there will be more emphasis put on interviews and on letters of recommendation for a while until things settle down again. But that is just a guess.