It is not incest because they aren't blood-related. He calls her sister like a younger boy would call someone he looks up to "Aniki". At least that's my impression. Also, those transformations are wild. XD
man, you're the translator, how come you won't shut up about incest? They're disciple siblings, the whole arc has been making fun of martial art tropes. The whole Raoh/Kenshiro thing