I for one would prefer not being forced into any type of lewd scenes, MC, non-MC, photos, videos, flashback included, but to answer your question, incest fans see it as the game rubbing it in their faces with what they can't have

At least thats how I read it from their posts. There is always the debate on the time and resources spent on those scenes being used in more MC screen time, but judging how emotional the posts seem, I doubt they care about the technical aspect.
I haven't played ch2 yet, so this is what I understood from ch1 and early dev posts:
On the topic of Olivia and the 'no incest', unless Dream changed his mind, or I am completely shit at analyzing the story beats, Olivia is(
was supposed to be) revealed not blood related to the MC and we probably find out about it by exploring the mother' story. IF the mother dies the MC and Oliva are not considered related by law anymore, society will still call it morally wrong, but it won't even be stepcest at that point. Its basically the initial premise of the MC and Jaye legal situation in Chasing Sunsets. So you see, both 'no incest' and Olivia will be a LI 'in the future' could still have been true, no lie by the dev there.
Seeing how it was later emphasized multiple time that
she will never be a LI, I don't really know what to make of it until I get more updates out of the story, then I will know if he shifted story direction, or I totally misread that situation.
Sidenote: I think we need to eventually talk how the AVN community is the only internet group of people with, allegedly, straight males that dislike hot girls kissing eachouther.

I am not talking about stealing LIs from the MC and cheating, since that is an entirely different genere and the
lesbianism is just the plot device making it happen. I was kinda shocked when I first started coming here and realized that, knowing that lesbian sex is one of the most popular porn tags and I can guarantee you its not because lesbians have a porn addiction.