To render a long story short, here is a situation in the campaign I'm in that involves incestuous relationships, and I'm wondering if incest, strictly speaking, should have an impact on in-game morality.
Two of the major figures in the campaign are the long-deposed king and queen of a destroyed nation. However, they are also brother and sister, and they have a daughter. The queen became a priestess of Ilmater (LG Forgotten Realms deity of suffering and endurance), and specifically has become Exalted. Both the king and queen think the other is dead.
The problem is that the king is hellbent on re-establishing his kingdom, and neverminding the means by which he intends to carry that out, he is an extreme racist and human supremacist, and he would die before admitting a non-human into the royal bloodline. However, his attitude means that the quasi-human kingdoms (Aventi, Kalashtar, Elans, Azurins, etc) would likewise die before submitting to the king and offering a daughter in marriage. The king knows this, and knows that his daughter has no idea who or what she is, courtesy of a memory erasure and reprogramming by a psion affiliated with the forces that overthrew the kingdom in the first place.
The king therefore intends to marry his own daughter, and he's a powerful enough wizard to muck with genetics a little to remove the negative effects of inbreeding.
My questions are thus: should the queen have lost her Exalted status for having been in an incestuous relationship with her own brother, and in this regard, is the king outright evil for intending to marry his own daughter, who has no idea what she is?