What tool or process can I use to see revisions on papers I am grading?
At my university, our agreement with Google is designed to make sure the content is hosted in the US so that FERPA-covered materials can be posted to it (I think. I know it's true for Gmail). This includes shared Google Docs which would have the full change history. If that works for you, then you could easily go with that. I'd check with your university-wide, central IT department (if you have one) to see if this option is available to you, too.