John,
I think it's great that your grandson is getting into the hobby, I started with my daughter when she was around that same age.
Ok, so on page 4 of the 6-12020 Uncoupling track Owner's Manual it says to operate this unit on 10 - 12 Volts AC.
Even though the power pack that came with the Lion Chief set outputs DC voltage, this Lion Chief Locomotive is designed to Run on either AC or DC.
So if you/they want to get an AC Transformer controller, that could work, with some important caveats that I'll get to. If you/they do get an AC transformer, I'd suggest putting away the DC transformer in a safe place your grandson won't find to avoid the possibility of him connecting two different incompatible power systems, which would likely damage something(s). An entry level AC transformer would provide enough AC power to operate the Locomotive, uncoupling track and a few more accessories.
The next question to answer is what voltage setting to use on the AC Transformer. Since the recommended AC voltages are 18V for the LC locos and 10-12V for the uncoupling track, there's the rub. Ideally there would be two different AC power sources, but keeping track of the LC remote controls, and how to set two different voltage settings on a transformer with several different wires might be too much for a five year old to keep up with.
So here's a possible compromise, set the AC transformer controls to 16 VAC. The loco will still run at this voltage if the electrical connections between the individual pieces of track are good. The uncoupler will also work just fine at 16VAC, but it's safe operational duration becomes shorter.
In other words, at 16 Volts the time that the uncoupler button can be pressed before the electro-magnet permanently fails is reduced. The instructions for the uncoupler warn you not to operate it for more than 10 seconds (using the 10-12 volt range), so your grandson would need to understand that if the button is pressed for more than a few seconds with this higher voltage, it might not work anymore.
Sorry if this seems over complicated, just thought you should have enough information to help you decide how to proceed.