Many people will breed father to daughter or mother to son. A lot of people usually dont do brother to sister. The chicks will not have defects. Chickens cant really "inbreed" as we call it, only if you line breed all the way down. It is always good to introduce new blood to your birds if you breed them like that.
Good question because I was wondering the same thing. If this clutch of eggs hatch under my now broody hen they will be my roosters chicks. I love him, he has a nice temperment and is quite handsome. So that means I will be adding yet more hens!