How did Chino's grandfather end up as a rabbit?
On the wiki, it says:


  Tippy is the owner of Rabbit House. In other words, he is Chino's grandfather, but he somehow has a female rabbit body. Nobody revealed why, but Chino refrained that her real grandfather already passed away, and yet Tippy already kept in the Rabbit House since the beginning.



Answerable questions:


Tippy is probably based on a thick and fluffy English Angora Rabbit.

Tippy was indeed a human before he passed away.