Hm, eugenics by definition is only possible once you know genetics. If you don't, you are just following a gut instinct. Now, it is rather difficult to breed humans to reach a particular trait - we have long gestation periods and even longer time to reach adulthood. Not to mention you need a large population to see the results of your crossings, therefore it is unlikely to see substantial gains if you only cross King with Queen, Prince with Princess. Furthermore, many human traits aren't exactly inheritable in significant ways or have a heavy dose of environmental influence. For these reasons, I can't see how to apply it properly in this game unless, of course, in the looks of your King's children.
Reputation/Prestige is a different beast. Again (thrice today!) I bring forth EU III to the parlor. It has both Prestige (measuring how fantastic your country appears to be) and Reputation (how honorable or despicable you are). Prestige adds bonus to a lot of things, including espionage, number of merchants etc. Reputation is a thin line: you gain too much of it and you start to get bad looks from your neighbors. Prestige in Elemental can work the same way, with different conditions, of course: you kill a dragon, you gain prestige; you come to aid your ally, you gain prestige; you refuse to help the starving tribes on your borders, you lose some; you lose a war, you lose a lot of prestige. Reputation, however, is a little trickier because Elemental does not seem to have a casus belli system. I must ponder on it further.