Do you let sims with common ancestors that the game no longer considers related be romantic?

Yeah, why not? Cousin marriage is legal in a lot of countries (including mine). Personally, I wouldn´t want to do anything romantic with my cousins, but considering genetics, there´s no real problem (not "ew" in any case).

The game is wacky anyway when it comes to relatives. If two sims who have children from different partners marry, those children are considered siblings, and can have no romantic interactions, which doesn´t make sense at all (especially if the children are already grown up).