Well that's a bold idea, Ebenezer killing his own daughter. Though I'm not sure I can go along with it. First, Ebenezer seemed shocked when Harry told him that Thomas is his grandson. He seemed shocked that Margaret had sexual relations with Raith, though frankly, that's something that he should have been worried about. Also, how would Eb know that Thomas was Margaret's first attempt at creating a starborn child? It would also mean that Ebenezer was lying when he told Harry that Lord Raith killed Margaret. That's a little more duplicitous than I believe Ebenezer to be.
If Eb knew they were going to lop off her head anyway, he might have, in an effort to protect Harry.. However while the Council seems to know that Margaret is Harry's mother, no one mentions or seems to know, with the exception of Rashid and perhaps Listens to Wind, that Eb is her father and and Harry's grandfather. Heck, in Blood Rites when he tells Harry a lot of stuff, he leaves out the fact that he is his grandfather. He says the Council knew Harry was Margaret's son, but leaves out the fact that he is his grandfather. Also weird, it the Council knew as you say that Eb was Harry's grandfather, would he still be under orders to kill him?
Yeah, I find it hard to believe that Eb wouldn't figured out that Margaret was having sex with Lord Raith. Ariana figured out that Eb was Margaret's father during that dinner with her, Eb, and Lord Raith. That screams of intimate family dinner type setting.. No, more like willful ignorance on Eb's part.. Oh your daughter is living with a guy, who happens to be the lord of vampires that live on sexual pleasure.. And if Eb was able to figure out they were having sex, he shouldn't have been terribly shocked that she had a child with him.
As I said, my brain goes weird places before six in the morning with only a swallow or two of coffee.
But I can see Eb lying to Harry about killing his mother, who'd want to admit a thing like that? Heck, when it comes down to it, while he elected not to, but would he have killed young Harry? He was under orders and if he thought it was really necessary.... So is Eb capable of killing his daughter and grandson? You bet he is, that is why he is the Blackstaff.
Fact, Eb has either lied or kept a lot of stuff from Harry. Eb has done a lot of bad stuff over the centuries, while the Blackstaff may protect him from black magic effects, it doesn't keep away the nightmares. To protect itself the brain will block out a lot of unpleasant stuff, it is even conceivable that Eb blocked out any thought that Margaret was capable of having sex with Lord Raith, let alone having a son by him. One one hand Eb is one of the most dangerous wizards on the planet, but at the same time he is showing signs of becoming a broken old man of 400 or so years..