We do it all the time in mammal's with line breeding. That being said, inbreeding is relatively common among reptiles, especially ball pythons. Most wild-caught morphs must be inbred to determine the genetics of the animal. However, multiple generations of inbreeding certainly aren't a good thing. There are a lot of "opinions" on this issue, so it's best to start a new thread on it. To answer your question from my POV, it's not a major problem as long as outbreeding is used as often as possible.
Keep in mind, animals that have a massive population today came from a very small gene pool (cheetah et al).