If everyone is happy about it there's no reason/problem calling each other cousin, auntie or whatever, when DCs are old enough to ask q's re: who is whose brother/sister etc they will work it out for themselves anyway. It's nice for DCs to feel part of an extended family!
However, it sounds like there's something in your background that has made you sensitive to correct family titles:
By Scaredycat3000 on Wed 25-Mar-09 22:37:43:
'The step thing has led to alot of covering up and lies within the family and don't want to continue with fibs'.
Sometimes there ARE problems with step families when a member of the family has behaved badly and as a result loses touch with the rest. In some families this member will be "tipp-ex'd" out and nobody mentions them.
Children are shush'd if they ask too many questions and made to feel bad by asking about their original blood relation whilst being forced to refer to the replacement family member and their DCs as Auntie, Uncle or Cousin etc when they have a Blood Auntie, Uncle or Cousins they aren't encouraged to have a relationship with.
This will be hard for any right minded person who has open and honest ties in their family to understand, but it does happen (I have personal experience of it) and it does leave you with a bit of a about how adults can fool themselves and try to fool you as children, and you kind of make up your mind that YOUR DC's won't be forced into such trickery and fibbery.