Yes, you can turn it into a frosting without it being "grainy".... There are a number of frostings/icings which are made without heating some ingredient to "melt" or to "dissolve" the sugar. You're looking at quite a bit of frosting with the quantity of ingredients you listed. Do you have an immediate use for this? This probably wouldn't be the best sugestion for that reason alone.
You can also make the chocolate cake you thought of, though it would be either a larger cake or you would have several. If you don't mind freezing a cake, that could also be a use for your ingredients. I have some "scratch" recipes if you need any. Also, chocolate pound cake or chocolate "bread", made without yeast is another option.
How about a fudge sauce for ice cream or other desserts? You may also make a chocolate pudding, using about half of your left over ingredients and using the other half for something else.
What about making some fudge? how about some truffles? Truffles are easier than you think..... And with the holidays, either of these sweets would be a welcomed treat!
If you need recipes for anything, just post the request.
I cook with wine.......sometimes I even add it to food!