All three of my bunnies have done that. I have a "bunny room" with the floor covered in layers of flannel sheets. They dig and chew and push the blankets just as you're describing. They push the sheets into huge mounds and tunnels by sliding their bodies back, flattening, moving back and pushing forward. I straighten them out and they start again
I think it's bunnies being bunnies. They're using muscles and movements they would use to build their underground warrens, to make nests and hiding places and unearth delicious roots and shoots
It's great exercise and they're practicing their bunny skills. In my experience, they do it more in the spring and fall--as if they're preparing for the new season.
I've read some excellent posts here on "false pregnancy" a behavioral and hormonal condition that may cause frantic nest building. But I think some digging and "engineering" is normal.
If you're up for it, you might try giving Gracie some sheets or paper towels on the floor to play in. It's great fun to watch. Scout used to love to get into a huge pile of sheets just out of the drier. She would dig and slide and push and binkie. I would shake one out for her and she loved to run under the sheet and feel the warm air blowing. Flannel sheets are best because they don't seem to chew them as much and they're safer if they do. But all cotton sheets worked for supervised play time.
It may not be too much fun for you, but I think the fact that Gracie's doing it with a blanket that's over you shows how comfortable she's become with you
