Right, gradebookplus's files in grade/ should overwrite the files in moodle/grade.
Within the gradebookplus/lang/en/ directory is a file called grade.php. This grade.php file needs to be copied to moodle/lang/en/ where it will overwrite the the standard grade.php file.
In 1.6, there are no language files in moodle/lang/en/, they are all under moodle/lang/en_utf8/. I put the grade.php file in the en_utf8/ directory and haven't had problems yet. In moodle 1.5, I think that there is only an en/ directory. Another caveat is that you don't want to copy the CVS/ directories into your moodle installation.
Be sure to backup grade/, lang/, database, etc, etc ...
(The grades.php file contains all the text that the user sees. Currently there is only an english version, but this file is required by the framework that allows moodle and gradebookplus to be multi-lingual.)