个人认为似乎不宜把took sth in the hollow视为一个特定结构。从有限的语境来看，最好把take理解为consider, think of。take...for...视为一个动词句式，意为think of...as...(把...当做...看待)。例如：I took Jack for an old friend of mine.  

all the school in the hollow=all the school children in the hollow。the hollow应该是指当地这个地方，类似于山谷（valley），可称为“谷地”。

所以took all the school in the hollow for grandchildren besides的意思应该是“把“谷地”这个地方所有的学童都当做自己（身边）的孙辈一样对待”。

老祖母不仅十分疼爱自己的孙辈，还希望能把她的爱带给更多人（wished there were more of us to love），所以把学校的孩子们当做自己的晚辈一样来对待。这与前文she who loved us all and said she wished there were more of us to love表达的意思是一致的。

一己之见，仅供参考。