I don't know that well but if the degen is on 1 it would not pass to the children
Some players allow degen because their pets have basically not bad genes, I mean the dominant and recessive by that. What Degeneration does it dimish the percentage of pedigree to bad genes.
Also when buying people prefer animals with genetic power and buy them probably to bred them and the offspring that comes from that is what is desired.
These 2 thread are really helpful
http://beastkeeper.com/thread/3382
http://beastkeeper.com/thread/3384
and yes it is strange to pay that much for bad genes XD