Heh. Yeah, they will probably eventually have inbreeding problems, but with the small community size, that's basically inevitable at some point. Still, this is long, long before Mendel, and people didn't really know so much about that. The issue of sex between a father and daughter falls into a murky place, for the very reason that it can happen unknowingly. The short answer is that no one worries about it too much, because what you can't know, you just can't know. When the biological relationship is known, though, it's out of bounds. This does not apply to children of the same father with different mothers. The term 'sibling' does truly only apply to children of the same woman.
The following of Amael could be seen in some ways as the Good Intentions Paving Company, yes. It is very reasonable to have that tension, as there is a type of control being exercised: xenophobia. The fae are dangerous, the dragon might eat you, the Catholics will burn you as a heretic. THEY will get you if you wander too far. You belong HERE with US. CONFORM or bad things will happen.
Your team is the good guys, but that doesn't make it perfect. Most people won't see the control, because it's not like any of it is nonsense. The fae are dangerous, the dragon may very well eat you, the Catholics probably will burn you as a heretic. That doesn't mean there's no motive for instilling these messages deep down besides your personal safety.
Likewise with Amael's commands. You have a duty to follow what she says, because she loves you and you love her, and if you don't, you're a bad person. THEY want you to disobey her...and it goes from there.