Personally I would keep the kitty as seeing its your first you bred and its a teacup to boot with really nice traits. As long as you think its a cute kitty I would differently keep it.
As for the second question interbreeding from what I can tell is not only allowed but encouraged once you learn more about breeding and really get into the nuts and bolts of it. Breeding a cat back to its parents is a wonderful way to pull traits or strengthen them in some cases. Also I throw this around a lot but its what helped me to learn. There a guide on breeding ((I am not sure how much you and your husbands current knowledge on breeding)) here
http://scratchn-post.com/online-classes/...e-classes/ that I would recommend. That guide helped me to better understand things my self.
