I have an older Trek 850 with Shimano acer X rear derailer and altus front derailer. Dog chewed on the grip shifts so I looking for parts to repair with no luck. Seems like in order to replace the shifter I need to change the derailer which means also changing the casset. Please tell me if im wrong. If I'm right will I have any troubles find a casset that will mount to the hub or will that need to be changed also.

If you get a grip shifter that has the same number of gears as your bike, I think it should work fine. What year/how many gears in the rear is your bike?

At this point, I would recommend you switch to a trigger shifter anyway since you're getting a new shifter. For one, I personally like them a lot better for the rear shifter, but I'm pretty sure they'll also be easier to find.