What you are talking about is inbreeding. The puppy would be from a father to daughter breeding. Most people would not recommend attempting inbreeding unless the breeder is very experienced and knows the bloodlines, the faults and strengths of the sire, the dam and the ancestors.
Here is an article that explains it a little bit:
PROS AND CONS OF INBREEDING DOGS, Inbreeding Dogs
As for if the pup would be okay, it is hard to tell when they are really young. If the parents are sound and look like good representatives of the breed then most likely the pups would be okay. There are lots of risks with any breeding.