* "Me" should be "I": When used as the object of a verb, "I" should be used. In this sentence, "honored" is the verb, and "Grace and I" are the objects.
* "She" should be "you": The sentence is trying to say that "you" invited them to dinner. The pronoun "she" is incorrect and refers to a female person not mentioned in the sentence.
The corrected sentence would be: "You honored Grace and *I* when *you* invited us out to dinner?"