Hi,
we had the same thing - this funny looking tissue at the g-tube site - and we first also wondered what it could be. As you guessed its granulation tissue and you have to get rid of it.
From the doctor we got a pretty aggressive creme, which worked to some extend. We put it on in the evening, so it was better in the morning. We also put it on in the morning, but still, in the evening (with all the moving around) it looked bad again. And you shouldn't use that creme for too long a time period.
A parent gave us the following advice, and it worked wonderful:
Dilute 1 drop of teatree oil with 10-20 drops of water. In the morning and evening clean the site with the diluted teatree oil (with a q-tip). It takes about 2-3 weeks to get rid of the tissue and to heal, but after 3 weeks you will be very happy with the result. Since we use the teatree oil our son's site always looks really nice and healthy, and actually we are using the diluted teatree oil nowadays only about 2-3 times a week anymore.
Take care,
Birgit