This question came up in our game today.
We thought that he literal interpretation was as above, but it made more sense in the game for it only to last 1 round. Otherwise, someone has to take a wound to shoot you or you always keep the grenade.
That's exactly why I think the literal interpretation is correct. Someone needs to take a wound to disarm you or else you'll keep threatening them with it.
In the example in the rules, Tino reveals the grenade before anyone targets, and then two players *decide* to target him. Why would they do that if they could just wait it out?
Also if someone expects they'll be targeted by lots of players, they could threaten to shoot the grenade holder, so that multiple people feel the pain.