i've done it.
i dated a coworker's second cousin 2 years ago. she and i were really close. she actually had never met her cousin, but knew his parents well. so she set us up. we lasted 2-3 months but i really didn't like him. i had a name for him after i broke up with him that's not very appropriate for this thread......
she didn't mind that we ended it. i did it amicably and actually told her the reasons why i didn't think we'd get along in the long run. she was cool with it, but i did feel the obligation to explain to her.
so, tread lightly. it all depends on the people involved.
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