Hmmm. Father and daughters have sex. Daughters get pregnant. Sounds like incest to me.
God had been watching Lot's back in numerous ways just before this act of incest. Why would God allow this incest to occur if He did not approve? He certainly did not hesitate to protect Lot earlier.
Yes, Moabites and Ammonites turned out to be some real bad dudes but so what? The kids of many biblical non-incestuous unions turned out bad too. Cane was one of the first of many such examples.