I literally just got in here to ask the same question! My sister-in-law and I were arguing about this throughout the show. I said it doesn’t matter if they were raised like siblings, they’re adopted as siblings. I consider it incestuous. She disagrees. She points out that they aren’t raised like siblings but more in a boarding school environment, so they’re okay and it would’ve been natural for them to develop feelings.
I agree with your sister in law. They weren’t raised like they were siblings. Vanya even states in her book in ep3 that they weren’t really a family, they were basically raised like fellow students. While I understand that some of the others consider themselves siblings, that was them forming that sibling relationship, which they don’t all have anyway. So they weren’t really raised like siblings, and although Allison and Vanya may consider each other sisters, and Luther and Diego may consider themselves brothers, that was really them choosing to have that relationship. Like if there were seven kids at a boarding school, one of them could think of some of them like brothers and sisters, but if they were to date one of the other ones, then that wouldn’t be viewed as incest.