"It is like most traits that is kinda passed down."
The problem is that most things which are not genetic, like an appreciation of magick, are not transmitted through lineage. Any affect your parents have on your magick is through their influence in raising you. Literally the only remotely magical thing you get via blood is ancestor spirits, and even then you can still "adopt" and be adopted by ancestors who are not of biological relation.
"But after a few generations the power of the magical bloodline fades away or becomes very diluted."
Then why can anyone perform magick? This theory also appears dependent upon there being some external origin that these bloodlines got their magick from... and this would be what, exactly?