I hear eugenicists say this sometimes, but I don't see what are the arguments to support it.
If the idea is that it's a waste of seed to ejaculate into your three-year-old daughter's mouth, wouldn't the same principle apply to masturbation? Yet, people would stigmatize the former a lot more than the latter. NoFap is viewed as more of a recommended than required practice. People respond a lot worse if you say, "I was doing a pretty good job not doing anything sexual with my daughter till she was prancing around in her underwear the other day and I couldn't help myself" than if you say, "Dang, I was doing pretty well on my NoFap streak but saw some porn and relapsed."
If the idea is that it's somehow harmful to kids to do sexual stuff with them, where's the evidence for that? It's probably hard to find a non-clinical population to study. Plus, if a study found that it wasn't harmful to kids, the researcher would probably bury it, to avoid ending up like Bruce Rind.
People might argue, "There's evidence that virginal brides are more likely to have successful marriages." Correlation doesn't necessarily prove causation, though; it could be, for example, that religious women are both more likely to wait till marriage to have sex, and also less likely to divorce, because their religion tells them to.
(We could control for factors like religion, though, to find out the truth about that. Chances are, though, that most virginal brides come from a religious family where there was a lot of social support for keeping her sheltered in her dad's home.)
But, also, even if it is true that bridal virginity by itself makes a woman more likely to have a successful marriage, it would be making an additional inference to say that giving her dad a blowjob would count as the kind of defiling that would harm her prospects of being a successful wife and mother.
The functions she needs to perform, for maximum eugenics, include attracting a quality husband, pleasing him, keeping the home, etc. so that they are able to keep the marriage together and maintain a high morale, so as to be better able to bear and rear children and do the other stuff they need to do as a married couple.
Where's the evidence that messing around with her dad as a kid interferes with her ability to do that stuff, described above, in the future? If someone's going to say she will eventually feel shame when she realizes that sex with prepubescent girls is frowned upon by society, one could blame that on society.
One could also note that women often have an attitude that if no one found out about what happened, it doesn't matter. E.g., girls who were in child porn videos often say that what bothers them is that people might recognize them from it; it's not so much what their dad did with them. Probably a lot of girls who did that stuff with their dad as kids just pretend like it never happened, or even feel proud of how they were able to influence him using sex, the same way that girls will often feel proud if they cheat on a test at school and get away with it.
Who knows, maybe sex with prepubescent girls is actually eugenic, if it helps create a bond between father and daughter so that they're happier, and he invests more resources in her, etc.