The story of Lot (note that in Hebrew this name is pronounced with a long "o" sound rather than a short one) and his daughters is found in Genesis 19:30-38. Obviously, as you said, it seems pretty fucked up. The most flattering explanation that I have heard given of it is that, after the destruction of the Cities on the Plain (of which there were five; the Bible describes the destruction of two of them, namely Sodom and Gomorrah, but two more were also eliminated, Zoar alone being spared), Lot's daughters believed that entire human race had been wiped out.
If you read the text closely, it says, starting with verse 31: "And the first-born said unto the younger: 'Our father is old, and there is not a man in the earth to come in unto us after the manner of all the earth.'"[/u]emphasis mine. The point that was made when we talked about it was that Lot's daughters believed that all human life EVERYWHERE had been wiped off the face of the earth. They believed that they and their father were it, and that it was up to them to repopulate the planet. So THAT is why they committed incest with their father, not because they particularly wanted to. I have read further about what caused the destruction of the Cities on the Plain, and some have theorised that it might have been a nuclear explosion. It certainly is possible. God has certainly been known to be behind some pretty crazy shit back in the day, and if you believe that God allowed Oppenheimer to create the thing that wiped out two Japanese cities, well, why couldn't he have sent angels to do the same thing back then?
But, to answer your question, yes, it is nasty that the girls did the wham, bam thank you Ma'am with their Dad. I can't think of a single Jew today who wouldn't agree with me. There are probably all kinds of explanations for it, and I don't have my books out to look up those explanations, as they are still packed from moving (I hope that changes in the next few days, but with a sick wife, I don't want to go banging about). But we had a discussion about this in Shul awhile back, and this was what we discussed, was the idea that the girls thought that they and their Dad were the only three people left on Earth. And who wouldn't after a nuclear explosion destroys five whole cities. I suppose, if you believe its your responsibility to recreate the race, you might consider doing it with Dad after all. I don't know. Sounds a bit odd to me, too. Does that help?