Is it acceptable/allowable to do a grant application as a team of 2, or would each person need to submit individual applications even though the project is related?
Yes. You can submit an application as a team. Both of you should be present during calls related to the application. After that, it's ok if only one person can do the reporting/communication, even though it's better if you can both attend. There would be 2 grant contracts (one for each person individually, with the total split between the two)