In the manga, they make it pretty clear that the dragon's morals and human morals are incredibly different and in many ways not compatible.
What people aren't pointing out is that Kanna knew what she was doing but forehead didn't quite understand what was going on. Kanna's lived long enough to know what reproduction is and wouldn't surprise me if she's seen a few humans do it, but she doesn't understand the inner workings of it.
The whole reason she acts this way towards forehead is because she wants to understand the sexual/romantic feelings Tohru has to Koyabashi.
As for forehead, she just finds Kanna beyond adorable and she's not too sure why outside of "I want to snuggle her". Ever seen a cute dog, cat or other animal that you just wanted to hug the shit out of? Thats how she views Kanna.
Unfortunately, thats about as far as we've gotten in the manga, but considering the mangaka, its more likely then not that well get a story arc where Kanna learns what she's doing isn't okay.