@ShalomToYou – In this case, you actually have the ability to offer another reason without having met her yet, as someone suggested. Her being related to the shadchanit puts you in a catch-22, and isn’t fair to anyone.
Why?
Suppose you dated her and she was stunning. But spoke lashon hara like it was going out of style. Could you tell THAT to the shadchan?
Basically the shadchan made a mistake with this suggestion, and you have your get outa jail free card as a result. You can say that it’s not fair to the girl – you might feel pressured to date her longer than you would otherwise (true from your above points), wasting her time – and it’s also not fair to yourself (wasting your time + you can’t explain why it didn’t work out).
“I’m not sure how to say this, but I feel awkward dating someone you’re related to. What happens if it doesn’t work out? We’re all human and nobody’s perfect … How can I tell you, what went wrong? Even if I find the most tactful way of saying ‘no thankyou’, in your heart of hearts it might still be upsetting and you would have a hard time wanting to set me up again…”