One thing to take into account is context of the writing. Martin's writing alludes to a more 'grimdark' version of medieval life thrown into a fantasy-lite setting.
The concept of Dragonblood fits in well to a fantasy trope, but the use of incest to keep the high valyrian blood pure is a nod to old practices among many late era, to early renaissance noble families to keep things 'in the blood' so to speak. Mostly it comes down to marrying cousins and the sort, a tradition and practice that remained entrenched right through to Victorian times.
It's also a nod to a few ancient Egyptian kings who married their sisters, as well as many other examples in near eastern proto-empires. The Valyrians are exotic, from the east with eastern beliefs and traditions when they arrive in Westeros.
From this context, I think the practice of Dragonblood is literally as described above, a more extreme practice of keeping one's nobility 'pure' so to speak by marrying into close relatives to create a strong, recordable lineage history, with a pseudo-religious nature to it thrown in to impress the plebian masses. The mythology of the past likely gets mixed in to further reinforce a belief in the divinity of the practice to the point it becomes an accepted 'truth' even by the practitioners, and not just the common folk.
I think you might also be on to something with the idea of keeping dragons 'in the family'. With many dragonlord families before the fall, their relative strengths would have been determined by whom had the most/biggest dragons as well as who had the greater wealth/freeholdings. Marrying especially a female dragorider into a rival family would, effectively, give them another dragon as the wife would join the husband's household, while leaving your own household one dragon less.
This is, of course, my interpretation given the way I view Martin's work as being history and fantasy smashed together with the grimdark turned up to 11. Of course all of this is subject to being proven totally false if/when Martin writes more about the Valyrians, their history and the origin of their practices.