I'm guessing there was nothing sexual between Magus and his sister, because I think he was maybe six or seven at the time. I think it was a stronger than normal bond because Schala ended up being more of a mother to Janus than Queen Zeal was. I think that he is not concerned with sex, as there are more important things in life than the mere pleasures of the flesh.

As far as Dalton goes, I'm not sure he's as incompetent as you make him out to be. The only mistake he made, as I see it, is that he sent the Golem Twins after you in the Ocean Palace and not skipping straight to the Golem Boss; the really smart thing for him to do would have been, upon his weakest minion's failure, to then send his strongest. However, if he really is as incompetent as you make him out to be, then your explanation on how he got his job is the best explanation.

Finally, I refuse to even imagine that there was anything even remotely sexual between Lucca and Robo. Just . . . no.

Everything else you postulated, however, seems directly on the mark to me.