The American Curl is an example of a spontaneous mutation, like the Scottish Fold. There are different genes responsible for the folded ear vs. the curled ear, and no relationship between the two breeds. They also come in short hair, known as the American Curl Shorthair. The difference is whether the Cat with the gene for curled ears is homozygous for the gene or heterozygous - if homozygous, it will always produce curly eared kittens no matter what it is bred to. This is so noted in all the registry rules of all the main US cat associations.
Any deliberate breeding done with another pedigreed breed of cat is unethical.
There were test breedings done when the breed was first being developed, where inbreeding was deliberately done. A number of breeders have bred several generations of curl eared Curls to curl eared Curls with healthy offspring occurring. They are at a mid-point between the more placid or active breeds. Many love to fetch paper balls or pompoms, sponge balls and seem to have a fascination with water. Their intelligence is unsurpassed by any other breed.