That does covers point 1 about 'how' (I missed the grenade dialogue), but not the perspective of the people who see the explosion; that even if the crowd accepted it was explosives, how come they accept there was not blood or guts; if someone exploded for any reason (internal, external, etc), if the person's body was involved in the explosion, there should be 1 or more physical parts of them; if they believe there is absolutely no body left, it should still be a blood mist. The point of this was meant to convince the crowd the girl was dead, but a fiery explosion shouldn't accomplish that fact.
You're expecting a lot from a not terribly high-minded series, but four things come to mind:
First, grenades are explosive, but not fiery.
Second, the grenade was just to make noise and stir up dust for the lack of impact. Not to make it seem like the body exploded. We'd see dust from crashing through doors and drywall, but not necessarily body parts. Body parts flying is not a requirement for dust and noise.
Thirdly, the crowd nearby most likely would've closed their eyes or taken cover, like when a baseball bat or, based on size, race car goes flying into the crowd. However, absolutely no one expects to see blood mist for a body that wouldn't make impact until somewhere in the hallway well outside the auditorium that's not in line of sight of the crowd.
Lastly, and most importantly, the officiants don't seem terribly concerned with verifying the death before declaring Kana the winner. So, probably not a requirement, even though our party thinks it may be.
