Role in the film
Grace was first seen in her father home when she overheard him telling tales to kids about the dragon he claimed he saw in his childhood in the woods, as he always does. She told the kids that she's always out in the woods and that is no dragon in the wood and jokingly says that if she sees the long, green creature, she'll let them know.
The next day, Grace went to the woods and sees a red line on one of the trees. She spots an owl's nest in the tree and repaints the spot blue to let the lumberjacks know where they are not supposed to cut. Then his colleague Forest Ranger Wentworth arrived. After giving one last look around, Grace left the woods, not knowing she lost her compass out there. She headed to the newly expanse and went to the backhoe. She found a set of keys and tossed them to the dirt. Wentworth asked if she did it again for her fiancee Jack and Grace replied something like that before she and Wentworth left the area.
The next morning, Grace returned to the expanse where lumberjacks were cutting the forbidden area. She thought at first Jack authorized it, but he revealed that it was actually his brother Gavin, which displeases her. While she and Jack confronted Gavin, they heard screams from Jack's daughter Natalie and went out to look for her in the woods. They find her with an injured and Grace spots the feral boy Natalie was following name Pete. As she followed him, Grace sees Pete was holding her compass. When Gavin sees Pete, Grace watched Pete climbed up the tree as Gavin caught, accidentally causing him to fall to the ground. Grace and Jack take Natalie and Pete to the hospital at their hometown of Millhaven.
At the local hospital, Grace speaks to Sheriff Gene Dentler, Deputy Smalls, and a doctor about Pete. She told the skeptical Sheriff Dentler about that Pete looking like he's been out for a long time judging his appearance and that he had her compass. Natalie returns after being checked on and revealed that only had a scrape on her leg. After she revealed to Natalie where Pete is, Grace told Sheriff Dentler and the doctor that she is going to take Natalie home and go back out to the woods. Then she asked the doctor to call her when he wakes up, only for Natalie to tell her that Pete escaped through the window.
After searching around, Grace found Pete in the fenced alley and, despite some resistance, she calmed him down. She and Natalie took Pete to their home. Grace convinced him to come inside with her and that she promised that she will take him to the woods where he lived. She told him she loved being in the woods as a child and, when she became an adult, she made it her job to protect the woods and everything in them, which supposedly includes him. Pete asked if it included Elliott and Grace asked, "Who's Elliott?" Pete only replied that it's his friend.
As Pete adjusted to the new surroundings at her house, Grace told Jack that until they find out where Pete belongs, he'll have to stay them and being around Natalie, who is around Pete's age, might help him open up. Later, Jack receives a call from Sheriff Dentler and he passed it over to Grace. The sheriff informed Grace that he found Pete's identity. He told her that his parents were killed in the car accident six years ago and he went missing afterwards. Grace was saddened by the news as Sheriff Dentler put a call to Social Services so they will take him in tomorrow.
As Grace was returning to Natalie's room, she heard Natalie singing to Pete. She told Natalie to excuse herself so she will talk to Pete alone. She asked Pete if he knew how he was in the woods first place. Pete only admitted that he was on the adventure with his parents, indicating he does remember what happened. Grace tells him that she lost her mother when she was a child and assured that he is not alone. Pete told him he had Elliott and he showed her the picture he drew of him. Grace was stunned as she recognized the drawing of the dragon, that is rather similar to her father's drawing. He said that Elliot doesn't like many humans, but might like her. Grace felt conflicted on whatever she should take him to social services or keep her promises to take him back to the woods tomorrow. She was present when Jack read Natalie's book called Elliott Gets Lost, which Pete had in the woods, to the kids.
Later that night, Grace went to her father's house. She goes to her father's billboard and was looking for something when her father suddenly came over to her, which surprised her. Grace asked why isn't he asleep and Mr. Meacham said she suspected it's the same reason she's still up since he heard about Pete. He asked how long has Pete been out there and Grace replied six years. Mr. Meacham says that no one alone can survive in the forest alone in six years and Grace pointed out that Pete said he wasn't alone. She showed him Pete's drawing of the dragon and he was surprised by it. She told her father that it was his friend in the forest and he reminded him of the drawing of the dragon he wrote. Grace asked how old was she when he drew this for her and it was 5 or 6 after her mother died. Grace asked her father to tell him the truth of what he really saw. Mr. Meacham revealed that he was out hunting and he went to the creek to drink some water when he noticed something was blocking the sun. He looked up and saw it was a dragon blocking the sun. He pointed his gun at it, but then he relented when he saw the dragon, it felt magical to him. He puts his gun down and he & the dragon stared at each other across the creek when it turned away and disappeared into the forest. No one believed him. Mr. Meacham tells his daughter that while he thought at times people were right about him not seeing the dragon, but more he thought about it, it change the way he looked at the world and the things he cherished, including her. He tells Grace that with that, she could change the way of looking. Grace told him that she knows the forest extremely well and she couldn't have missed the dragon. He told her that she missed Pete.
The next morning, Grace gently wakes Pete up and gets him & Natalie to her car. Jack said he has to head to the deal with Gavin about something. As she arrived at Social Security Agency, Grace felt conflicted of what to do with Pete. After a moment of thinking, she decided to honor her promise to Pete and picks up her father to go the forest since he might know Elliott. As they arrived in the forest, she, Mr. Meacham and Natalie follow Pete to the cave where it has a uniquely built treehouse. Pete spots his own Elliot Gets Lost book outside of the cave as he enters the cave. Grace was nervous about the whole thing, but Mr. Meacham calms her down. Then Pete comes out with Elliott. Upon seeing Elliott, Grace was shocked and amazed at the same time. Mr. Meacham tells her it is magic. Suddenly, Gavin and a gang of hunters captured Elliott by tranquilizing him as Grace and the others watched in horror as Elliott damaged the treehouse before being fully sedated.
As Elliott was taken to the large warehouse in the lumber mill, Grace does her best to support the despondent Pete over the situation. As Grace looks at the sedated and chained to the flatbed truck, Grace touches him and his skin color changes realizing that Elliott does feel. When Sheriff Dentler and the others arrived in the lumber mill to see Elliott at Gavin's request, the doors to it are barricaded. As they went inside, they see Elliott is not there and Gavin thought he escaped through the skylight. But Grace actually sees Elliott has actually magically camouflage himself. She warns Jack about it as Mr. Meacham, Pete and Natalie drives through the warehouse to get Elliott away from Millhaven but also gets exposed to Sheriff Dentler and other residents in the area. As Gavin was about to get to the truck, Grace took his keys and tossed them away from him in an attempt to distract him. She goes with Jack in his truck and follows the flatbed truck.
As she and Jack were heading to the bridge where the flatbed truck made it through, Grace sees Elliott on top of the bridge and realized too late he's going to attack the bridge in his agitated state, due to his captivity. Elliott lets out his breath of fire to the bridge to back the police away from him. But accidentally hits the area near Jack's truck, trapping both him and Grace inside it due to intense heat. As the bridge was about to collapse, Pete convinces Elliott to stop and she needs Grace and Jack just as much he needs him. Elliott, realizing his error, props the truck up in an attempt to save her and Jack. The repentant Gavin rushes to the back of the truck as Jack break the back window. As Grace and Jack came out of the truck, the bridge collapsed, causing Grace, Jack, and Elliott to fall off. But Elliott managed to save her & Jack and flew them back up to the road above them, much to relief of everyone around there. Grace then hugs her father in relief. Before the military helicopter was about to arrive, Pete and Elliott took off to get away as Grace tried to stop them, but was too late as she watched them took off.
After the incident, Grace, shaken by the events, drives Jack and Natalie to their home. As Grace and the others were about to go inside, she spots Pete at the driveway. Grace, relieved to see Pete, happily rushes to him and hugs him as Jack and Natalie watched him with joy expressions. Grace silently welcomes Pete to the family. Then she, Pete, Jack, and Natalie see Elliott flew up in the cloudy skies above their house.
Some time later, Grace and Jack got married and adopted Pete into their family. Pete, who having adjusted to his new life with his new family, takes Grace, Jack, and Natalie up north on the road trip on a different forest and they find Elliott in the isolated area. Grace beamed up with pure happiness as she sees Pete and Elliott reunited. She also sees five other dragons with him, as Elliott was finally reunited with his own kind.