Unlike his assistant coach at the Rebels, O'Connor is known more for his attacking talents than his defensive strengths but Grey is convinced he can step up to the plate when it matters most.
"He's certainly someone attackers do underestimate," said Grey.
"When he gets his technique bang-on, he can drop anyone, no problems whatsoever.
"He enjoys tackling, because he knows people want to target him and it's a challenge for him. He is a powerful little bloke.''
O'Connor was bumped off a little too easily by Rene Ranger in the Rebels' recent defat to the Blues but Grey dismissed suggestions that the blow was a sign of any frailty in the 22-year-old's game.
The versatile youngster suffered a sternum injury after being hit hard by the same player moments earlier and Grey was quick to highlight his bravery in simply attempting to make the latter tackle.
"He had an injury that most blokes usually come off straight away with, he stayed on the field to see if he could keep going,'' added Grey.
"Unfortunately, they made a linebreak and he's tried to get in front of Rene Ranger with one arm, and that was the result.''
Those sentiments were echoed by Rebels head coach Damien Hill who believes his man is more than up to the job of stopping whatever The Lions throw at him in Brisbane, Melbourne and Sydney on June 22, 29 and July 6.
"As far as Test matches go, if there is a question around James's physicality that is probably unfounded given his history at that level and the way he's competed physically in Test matches in the past. I don't think that's an issue to be honest," said Hill.
''In terms of his toughness, in that game last year where he had his liver lacerated we had to drag him off the field to get him off.
"He loves the physical battle, if he has the opportunity to play for Australia (at fly-half) he will put his body on the line every time."
O'Connor missed the Rebels' maiden victory over the Waratahs last weekend as a result of his sternum injury but is expected to feature when they travel to the Reds on Saturday.