Ed, what did you have to do to get it working?
Yes, from what I've read here, the breaker could be bad. They are an unusual design, described in one or more threads on this board, none of which I can quickly point you to. Some searching should turn up the information.
The other possibility is that the breaker is good and the grinder just draws too much current on starting. It's very common for a motor to draw more than three times its running current when starting. I've measured some fairly large 3-phase motors and found them to draw ten times their running current when starting! A "soft-start" might allow you to start the grinder, as could a VFD (variable frequency drive) programmed for a motor speed ramping rate that keeps the starting current within the capability of the generator. These would make the grinder start slower and draw less current while doing so.
You might try using a clamp-on ammeter with a peak-hold function to measure the maximum starting current to get an idea of what you're dealing with.