Everyone has an opinion, and most have at least some merit.
Too many people want to apply human 'moral' values to animal breeding, but IMO, in a small commercial herd, I see no great issue with a bull - if you like him and his calves - breeding his half-sibs or daughters. Just makes sense, in most instances, to make utilization of that bull and his genetics for a longer period of time - I can't see buying a new bull every 2 years, just because he has some daughters in the herd. Resulting calves won't necessarily be deformed/retarded - but if the bull is a carrier of undesirable recessive traits, those will have a greater likelihood of being expressed. And, by the same token, if he's got some really desirable traits, you'll be further concentrating those in your herd.
Now, if you get to the point that he's breeding granddaughters out of his own daughters, you may start seeing some inbreeding suppression (I did, in my little run at linebreeding - though some were exceptional), and it's probably time to introduce some new genetics.
Now, I'll certainly agree that you might be able to 'pound him out' and turn around and purchase a pretty decent replacement, either with just that cash or with a little extra added on - and, using an F1 halfblood bull on his daughters/half-sibs and crossbred cows may give up something in the way of 'uniformity' of calf crop, if that's one of your goals.