I totally disagree with the notion that you should treat your son differently than your grandchildren other than the fact that you have to treat each child as an individual. You are raising the girls, they are now essentially just the same as your two childen. I have seven step-grandchildren that are currently in foster care. If I had the space, they would be here and it would probably be horrible for my kids but family is family and you don't abandon innocent children, you allow yourself time to adjust and make the situation work. Each child needs to feel loved and special in his own way, including those two little girls.
Sounds like he is using regressive behavior to get attention and he probably is lost in the shuffle. If your 16-year-old is normal, that one is a pain in the rear although if it is a boy not the way the girls are, and with a 2 and 3 year old, realistically how much alone time or attention is your middle child getting? Ask his brother to hang with him that will probably help.
Also, one of the things that I have gotten from the nanny is that part of the problem is that when they get to a certain age, we expect them to entertain themselves and making sure they have something to do is helpful. If the kid doesn't have chores, he needs some and you need to find things he can do that shows he is responsible and capable and make sure to praise him when he does it well.
With the talking back, you know by now if you don't get a handle on that you are not going to have fun with this one for the teen years so punish him consistently and make it something that actully bothers him. The worst thing my mother made me do was sit in the corner in the living room in a chair (comfortable one) and do nothing for like an hour, drove me insane, way worse than grounding or anything else they came up with.
Also remember that it is normal for children to behave like Mother Theresa when they are away from you, that means you have raised them well. At home, they push the envelope and often behave way more immaturely because as much as they are trying to separate from you, they know you are their safety net and that you will love them no matter what, so they act like little (fill in the word) at home and drive you nuts.
Mine are 9, 13 and 16, I am a single mom and there is never enough of me to go around. Even my boys, who are supposed to go closet themselves in their rooms, come in to debrief nearly every day so I spend probably at least 3-4 hours a day doing pretty much nothing but talking to the kids. And it is still not enough for them.
Kudos on you for stepping up with the grandkids and just remember, sometimes you need alone time that is beyond going to eat with him at school, do you bring the little ones with you when you do that? If so, try to find someone to watch them and go by yourself at least some of the time. No matter how old they get, they don't want to share, and that is it in a nutshell.