Now a simplified version of that could work on a 40 mm. That would however add yet another sticky-out thing to the weapon, to add to the Christmas tree effect.
You know, it need not...all it would take is a graduated level that could attach to the side of the mil-std 1913 Picatinny rail. Our current M224 60mm has that built into the firing assembly. It just needs to be small, lit by a tritium ampule, and could clip on via any number of attachment means that are already in use for side-mounted sling swivels.

A couple rounds to get the thing zeroed and locked down with Loctite, and there you have it. No need to fiddle with a sling marking system that would rely on the grenadier to pause and adjust it to the appropriate length for use. There would be slight variation due to the surface the buttstock rests on (sand, gravel, boot tip, etc.). The only thing limiting this setup would be the degree of accuracy required in the requirement document, as it related to mounting the sight to the rail, adjusting the rail in relation to the launcher receiver, etc.

We might never get there due to tight tolerances required by whomever would generate the specifications, but my light bulb just clicked on.