re: realistic or not, as the MC remarks: the world is a "light-hearted otome game" so the setting isn't meant to be that detailed. Also lest anyone forget, the world has 'artifacts' from a technological age, and magic. Once you throw magic into the equation, all bets are off regarding what's...
Well, it's a different world with magic, the village has a tradition of inbreeding, so if there were actual genetic problems those probably would have been noticed and things like the Westermarck effect likely be at work as well.