I believe there is a little bit of confusion going on here. Before V2 protestants were allowed to marry Catholics. There was a promise required from the prot. spouse to have the children baptised, and raised in the Church.
The problem would arise if either party was previously married. In most cases, barring evidence to the contrary, the first marriage was judged to be binding. Communion was denied to the Catholic who would be scandalizing everyone by living in sin with someone else's spouse or putting away his own spouse, and then receiving the Sacrament. Now if they were living as brother and sister, they were not committing sin in truth, but the scandal was still present.