The least that must be done is a complete study of both dogs 4 generation pedigree, be familair with the lines, and knowledge of pups have been produced.
This is true for any breeding, line-breeding or outcross. In dogs, close breedings are not morally unacceptable as they are in humans, and actually area a "safer" bet for a new breeder because if you know what's behind one dog, you pretty much know what's behind the other one. (Close in this case meaning grandfather-granddaughter - a very popular, "good" breeding - aunt-nephew, half-siblings, etc.) Really close, like mother-son, father-daughter, brother-sister are a bit more tricky. Outcrosses (or at least the closest we can get to them in our breed, where there are no common ancestors for 4-5 generations) are trickiest - because there may be no problems in either line, but you don't know what kind of horrors bringing them together will unleash.
That said, many people feel that outcrosses are the only way to go because we are working with such a narrow gene pool. It's a tough situation, and each breeder needs to make their own choices. I've done two line breedings, with good results, and my next one will be an outcross - so we'll see what happens!
Julie