
Hi,
There is a fine line between in-breeding and line-breeding. In-breeding is usually considered to involve close relationships such as mother/son, father/daughter/ brother/sister, grandfather/granddaughter etc. Line-breeding involves less closely related individuals, but still with mutual ancestors three or four generations back.
In your hypothetical situation the dog would have to have no major faults that his daughter could inherit, because they would be 'doubled up' and to all extents and purposes permanently fixed when he was mated to his own offspring.
Hope this makes it a bit clearer.
:)