I think that you should contact Child Services and ask them their opinion. I don't know if it represents a danger to the children, but if the father molested her as a child and somehow is continuing to have sex with her even now, it would suggest that her daughters are not safe.
As for the girl you have been dating, she can still charge him after all these years for the modestation she suffered as a child, but since she is sleeping with him now as an adult I doubt she is in a place mentally or emotionally to even consider it.
Talk to some experts as to how to proceed. Those kids lives are important and you have the power to make sure that they are safe; but it must be handled properly. Seek some professional advice, do not act alone on this as it is potentially explosive. You may be advised that nothing can be done, be prepared to be extremely conflicted.