Ok, here’s the deal:
I’m considering a cross between Cigar and Go For Glory. However, they both have Seattle Slew in their lines three generations back. HOWEVER, since Cigar is a “real life” sire, his lineage shouldn’t be related (no in-game dam/sire) to the “Seattle Slew” (the sire in the game) that was bred to In Demand to produce Demand to Know (Go For Glory’s dam). With regards to the code, will this be handled as a case of inbreeding?
It would, because the inbreeding code knows that Slew shows up twice in the pedigree, so it’d factor that in when creating the baby.
You can tell because the hypo mating page bolds Slew in the potential foal’s pedigree, so it recognizes him as the same horse appearing twice. 
Bleh…
But it’s at least 2 generations back…so maybe the foal wouldn’t have 5 legs…
Ah well, thanks Shanthi.
Not all inbreeding is awful/sure to produce a horse of glass…the main “concern” with inbreeding is that you not do it too close (1 or 2 by anything less than 4 would be inadvisable…which translates to not breeding horses to their parents, or half siblings to each other, etc.)
Good luck with the baby, anyway. 
Technicially you aren’t inbreeding these particular horses. You are line breeding them as they are 3x3 to Seattle Slew and that is perfectly acceptable in the outside world. As far as in breeding at 2x3 it would be acceptable in the outside world and “sometimes” you see them at 1x4 but not to often. 2x4 is also seen a lot.
The fact that a 3x3 cross is termed “linebreeding” doesn’t change the fact that the horse is inbred. 
“Linebreeding” is a term for a more “acceptable” level of inbreeding to the same horse/lineage.
In real life, there is a lot more inbreeding than in FF. However, in real life, horses are way more fragile than in FF, too.
My belief in that is that if you have an amount of in or linebreeding is that your horse is then set up for total outcross breeding (4x4 or greater). That leads to stronger healthier horses… may work the same in FF as well!!!
And my point is that, while that works in real life, it won’t work in FF (soundness-wise, at least). FF treats all inbreeding/linebreeding the same, and inbred horses can become less sound by being inbred.
The in/linebred horses may be “stronger” in that they are more similar to the in/linebred individual (assuming said horse is good, obviously), but they will not necessarily be “healthier”.
I think we all agree that if you inbreed or linebreed you assume some risk of possibly having soundness issues. One of the ways you mitigate the soundness issues (to a point) is to breed superior animals to each other. The healthier part comes in when you then breed that animal (inbreed or linebreed) to one that has no like ancestors in the first 4 generations.
That is where Shanthi is pointing us, to have horses with no common ancestors within the first 4 generations.
Actually, for FF it’s 5 generations.
And I still think you’re missing the point…it’s possible to mitigate the soundness issues from inbreeding in real-life by inbreeding to sound horses, but in FF that is “overwritten” by the fact that you’re inbreeding at all.
So then that would beg the questions… Why no differentiation between linebreeding and inbreeding and why such a harsh penalty?
Because genetically, there is no difference. As I said above, “linebreeding” is just a politically correct term for “happy” inbreeding. It’s still inbreeding. Thus, FF treats them the same.
Oh! Consequently I have a colt with the same thing, Seattle Slew 3 back for the baby. 
That was a total accident though haha. I think he’ll be fine in the end.