I am not going to lie, I am no expert on dynastic marriages, but I can't see why marrying close relatives would have required dispensation from the Pope. The Book of Common Prayer has a big list of people who you are not allowed to marry, and first cousins are not included in that. I know it is a Protestant book, but were Catholics really that different to Protestants on the issue of marriage?
On that issue, yes. Any degree of consanguinity could annul a marriage according to the Catholic Church. If you go back further to medieval times, the rules were so strictly drawn that I wonder how anybody living in a small village or hamlet managed to get married at all.
Here's the rules as they stand today....
Legal prohibitions on marriage between cousins (and other close blood relationships, such as uncle and niece) stem from the Church's ban on such marriages. Before 1983, marriages between second cousins were prohibited?indeed, former New York mayor Rudy Giuliani received an annulment of his first marriage after determining that his wife was his second cousin. Today, second-cousin marriages are allowed, and, under some circumstances, a dispensation can be obtained to allow a first-cousin marriage. The Church still discourages such marriages, however.http://catholicism.about.com/od/catholicliving/f/FAQ_Marriage.htm