Board Thread:General Discussion/@comment-10317392-20140801035045/@comment-24994749-20140801192431

We still don't know if faunus-human interbreeding is possible. Blake refereed to humans as a different species, not race. Even if interbreeding were possible, we don't know how traits would be passed down (dominant, recessive or co-dominant) to determine the looks of the offspring.

Personally, I still leave the "Uncle" relationship a bit in the air. It is possible it's just a nickname he earned through being close friends of Ruby's father, Summer or Yang's mother.