He knows. Fortunately for him, inbreeding is a stacking effect, so the results probably wouldn't be too severe...But regardless, in this AU he mostly wanted it as a means of controlling Isabelle and exerting more power over the family. Nothing is ever enough for this guy. With age, Isabelle was getting more independent, so he wanted to sort of babytrap her. Backfired for sure. He didn't count on Viola actually being willing to help.