Needs & requirements may be somewhat different for registered seedstock producers and commercial producers.
For a small commercial producer, I've always felt that maximizing use of a good bull that throws the kind of calves you want, could and would include using him over his own daughters, and in the vast majority of cases, you'll get by just fine - and buyers don't know or care that they have some inbreeding/linebreeding. With small cow numbers, I found it hard to justify selling a really good bull after two years, just because he'd be breeding a daughter here or there.
That said, in order to maximize productivity, switching to a second or third breed bull will maximize hybrid vigor and probably return sufficient $$ to justify swapping out bulls every 3 years or so.
That said, in the event that there are recessive genetic defects in the woodpile, you can have problems. The GAR Precision 1680 bull was mentioned earlier... he inherited the Arthrogryposis Multiplex (curly calf) gene from his maternal grandsire, Rito 9J9, but the Neuropathic Hydrocephalus defect originated in 1680, so he was a 'double-carrier'. No one knew that these defects were sliding along undetected. 1680 was used widely and heavily, and when his sons/daughters/grandsons/granddaughters started being bred to one another (or back to 1680), carriers of one or both defects had the opportunity to be mated and defective calves began to arrive.
We experienced our very own Angus genetic defect, courtesy of a bull we purchased in 2007. Used him across the entire herd for two years, and his daughters were fabulous, steers were good. We started doing AI on 90% of the herd, and kept the walking bull for 'cleanup' behind AI. So... for about 5-6 years, there were several instances of him breeding a daughter, or even a granddaughter. Most calves were fine, but over a 6 year period, we had about 9 defective calves born, which were determined to have Sodium Channel Neuropathy. Genetic testing revealed that a high percentage of my cows, which were daughters/granddaughters of the original bull were carriers. Testing of all ancestors of the bull with DNA profiles on file revealed that none of them were SCN carriers, so it was determined that our bull was the 'founder' of the SCN defect, just like the NH defect arose in Precision 1680. We sold him at 10, but had retained a SimAngus son to use on heifers... which turned out to be a SCN carrier, and sired 2 or 3 defective calves himself. Confined to our herd, with both affected sires sent to slaughter, SCN is essentially relegated to the dustbin of history.