One of the biggest problems you're going to run into is that all the terms you've mentioned in your post are very important to understand, and they almost all mean different things to different people.
Take for instance "closed flock." I've heard people claim to have a closed flock who lease out their rams or have ewes in from outside for breeding service. They consider they're flock closed because they aren't buying in any ewes. So genetically, it's a closed flock, but from a biosecurity standpoint it is anything but.
Nearly everyone who has a closed flock means that that they don't import outside ewes, but they almost always import rams from outside at least occasionally. I think that Bill Duffield is one of the few shepherds I've communicated with who only brings in outside rams via AI -- correct me if I'm wrong.
Inbreeding, technically, means the breeding of any closed population. So any purebred sheep is inbred to some extent (except for show sheep, but don't get me going on that). Linebreeding is a form of inbreeding where closely related ewes and rams are bred in an attempt to fix or concentrate certain traits. The challenges of line breeding are 1.) that you lose all traces of hybrid vigor in the lambs, so you will see generalized production losses as you work to concentrate the traits you are working on; and 2.) you will concentrate and fix some traits that you wish you hadn't. So when you're embarking on a linebreeding program, you have to be ready and willing to accept a lot of clunkers to get a few real gems.
Father-daughter crosses are generally considered a little too close by most purebreeders, but grandfather to granddaughter is a very common way to fix the traits of an exceptional ram. The other problem with line breeding is that some people do it because they think they have an exceptional ram who perhaps really isn't so exceptional.
At some point, you could devleop several line within the same flock of purebred sheep, and start crossing those lines with one another, or bringing in outside rams from different lines to see if you could devleop other lines that were worth breeding closely.
As to why father-daughter breeding is too close, I think that at least a good part of it is the "yucko" factor -- that is applying human taboos to animal husbandry. But realistically, the closer two animals are related, the greater the downside risk of concentrating more bad than good.
Not having to deal with all these considerations is one of the greatest reasons for buying replacement animals. Of course, biosecurity is compromised. Like every other management decision, it's a tradeoff.