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The simple combo: Cinnamon hen with normal peachface w/Violet male can produce normal green females; or females with single factor violet. Male = normal greens/American Cinnamon and Normal Greens.
If Kate has a seagreen factor in her American Cinnamon you may end up with (for males) Am. Cinn. Single Factor Violet/Dutch Blue or Whitefaced Blue; Am Cinn/Dutch Blue; Am Cinn Single Factor Violet/Dutch Blue.
For females: Am. Cinn/Dutch Blue, Am. Cinn. Single Factor Violet/Dutch Blue or Whitefaced Blue; Am. Cinn. Dutch Blue; Am. Cinn. Whitefaced Blue.
Line breeding or in-breeding is often done to set traits and make select hybrids. Cockatiels are so hybridized that they often look like a different species of bird from their original ancestors living in Australia. Budgies and parakeets, finches and of course the lovebirds are among the most commonly genetically engineered - and that requires mating parents with offspring and in lesser cases, brothers/sisters.
The sibling interbreeding is less done because the genetics are closer and if there's a recessive fault, not obvious in either adult, it can become an apparent fault, whether health related or physical deformity.
Let me put your mind at ease about the handling of the eggs too. Psittacines like this really don’t have an acute sense of smell. In fact, very few birds do, with the exceptions of (turkey) vultures, petrels and albatross, along with some others.
The origin of the tale about touching birds’ eggs was probably originally to discourage people from disturbing birds nests in the wild and to keep children’s hands off mating birds in the home.
Another good reason to avoid touching eggs is because the shells are very porous and human hands are loaded with bacteria that can pose a health risk to the developing embryo inside. Too much handling can impart too many oils, also naturally from our hands and clog the pores in the eggshell, causing a decrease in oxygen and possibly suffocation in the egg.
Now, back to trying to avoid this situation to begin with: If you keep them coming out of their cage regularly and perhaps establish a nighttime cage for them (see more about sleep cages and set up here ) and increase nighttime hours to 13 or even 14, they'll be less likely to breed.
By not putting a breeding box in the cage and changing the dishes around often so they don't try to make a nest out of them, it further helps.
I'd love to see pics of the classic couple if you have any. You can add a photo to this question by clicking on the 'tree' symbol at the tool bar above, not far down from the yellow smiley face.