But I was told that if I.. 'enjoy' both, it will backfire and stop both paths down the line?
Yes, there is that, but that's precisely why you should do it (if you wish) on a first playthrough - it's a case of making your own mistakes, and in this case getting some potentially pretty strong scenes as a result. I'll always recommend doing a "blind" run the first time round, so you can figure out who you like for yourself, and then if you like the game, you can then do a dedicated run for the girl (or girls) you like.
Curious why is the Mod suggesting me to reject Rachel in the house and end her path so early in the game?
Specifics for Rachel have already been mentioned, but personally I would say it's because the mod is giving you the "best" options, however, that's in the opinion of the person who made the mod, and might not be what is "best" for each individual player.