I'm similar to Duo Maxwell though. I too have a little sister and I'm also a big fan of incest in fiction, and well, I don't correlate the two in any significant ways, and would fiercely object to such an attempt.
In serious incest stories it's really just another form of the well-loved romance trope of Forbidden Love. It could be an angel and a devil, a prince(ss) and a pauper, heirs of rival families, supernatural creature and mortal, occasionally all of the above plus they also happen to be lost siblings or something.
In "typical" Japanese manga and anime it's also a shortcut to saying two characters have a really strong bond without having to actually display it in detail. Like a powered up, forbidden (i.e. even better) childhood friend relationship. "These two characters spent years of their young lives together (often *only* together), therefore they're very, very, very close. Too bad you aren't seeing most of it. Regardless, ship away!"
In the case of Kobato however it's refreshingly just a reeeaally affectionate/dependent relationship without the sexual angle, regardless of fanservice, hence why she's a bit hung up on Maria and not Yozora and Sena (well, Sena scared her but that's different), and hence why it's a bit of a joke's-on-you for some of you guys (+ Sena XP) going crazy over her brocon, because she really isn't "aiming for" him unlike half the Little Sisters out there in otakudom. Kodaka's non-reaction is completely understandable to me (I don't exactly get flustered over my little sister either...why would I? Of course, my lil' sis isn't exactly as childish as Kobato despite their similar age, so she isn't going around trying to "transform" in the living room).
In real life...there are undertones of abuse and exploitation that overturns all the "win."