Wouldn’t this effect, which prevents children who grow up together in the same household—regardless of whether they’re blood relatives—from being sexually attracted to each other, have caused Dal Po and In Ha to just consider each other as siblings? Although of course there are exceptions in real life too.

I just watched 9 Times Time Travel too, which also features uncle-niece incest, and I wonder if this is a thing.

most probably yes, but i honestly doubt drama writers know something like this exists haha!

I think Pinocchio is a believable example of a normal relationship, because they don't meet until they're middle schoolers.  For the Westermarck effect to take place, it has to be co-habitation and shared carers/parents, from early childhood

Plus the absurdity of the uncle scenario is explicitly acknowleged by the entire family.  There was never any family expectation of a true uncle/niece relationship.

I don't know 9 Times Time Travel.  Could the relationship in  Pinocchio be a cheeky satire of that element in 9 Times...?

Westermarck Effect is only a hypothesis, not even a theory. Sibling incest (or other relational incest) wouldn’t be a thing if it were a fact. In fact, it is just as common for incest to occur between relatives who grew up in close proximity to one another as who did not have close familial ties, no matter how taboo it’s viewed in our societies. It’s gross, yes, but just because it’s gross doesn’t mean it doesn’t happen and it is the most unreported crime there is.