I've looked at these pictures extensively throughout the day, and the more I look at them, the more I see these kids perfectly combining their parents' genetics.
Also, they are by no means ugly, I've seen much much weirder offspring off two supposedly pretty sims.
Anyway, I think the problem is the underestimation of the complexity of the facial features. Each part of each feature has different parameters: size, shape, width, height, sometimes sharpness and or curvature. All of these different factors are used in creating offspring.
So (random example) while they may have their dad's nose shape and nostrils, but with the height of the mother's nose and nostrils. They may have their mum's nose tip, but with dad's nose tip width, with a nose bridge width that comes from mother, etc. There are so many variants.
And, a lot of people (myself included) underestimate the strength of gender swapped features. If you make a really pretty sim in one gender, then switch to the other, a number of their features will inevitably be exaggerated. And the overall Sim, will more often than not, not be really really pretty, but strangely attractive at best.
If you want predictable-ish offspring, make parents that look a lot like each other, or at least use the same general sizing of features so that large and small parts don't mix in uncomfortable ways.
