Seems a bit close to me! We humans wouldn't do it!(I hope) I do know of a prize winning foal whose dam and sire were by the same stallion...and I thought that was too close for comfort!!
I agree - far too close. I have a mare who has the same grandfather as my stallion and I won't breed her to him even though it's 2 generations back.
They say linebreeding is great when it works, but can be a disaster when it doesn't.
We bought a colt and he was by Chippendale Z who is by Cento and his mother was also by Cento!!! This meant both his mother and father were by Cento and he was bred by the Zangersheide stud themselves!!! He turned out absolutely amazing and he didn't have 5 legs or 3 eyes either!!!!
Arab breeders often do a lot of line-breeding - some very intelligently, some rather indiscrimnately (IMO). It can work very well, providing the horse one is linebreeding to is truly outstanding, and has an outstanding pedigree.
There are also some breeders doing much closer in-breeding, such as father to daughter - can work but I certainly wouldn't have the confidence to do this!
I think the Gustavii stud do it, not sure if they do it that close, but certainly near that. They are based in the UK as hardly any other countries will let them!