Yes, there is. Inbreeding dogs has the same problems as inbreeding humans. The puppy would likely be sickly and of reduced intelligence, as well as possibly deformed.
Inbreeding is often used when breeding dogs as a way to fix traits in a breed. Extensive inbreeding can lead to the loss of desirable genes and unsuspected health problems.
Breeding dogs with their father is incest. If the father carries a genetic defect, then cross-breeding results in 1/4 of the dogs carrying 2 copies of the gene.
Yes - the daughters of the dog will have inherited some of the genetic faults of the father. If bred, these faults will become apparent as they exist in both parents.
