DanArmak comments on CEV: a utilitarian critique - Less Wrong
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It's very hard for A and B to know how much their genomes differ, because they can only observe each other's phenotypes, and they can't invest too much time in that either. So they will mostly compete even if their genomes happen to be identical.
The kin recognition that you mention may be tricky, but kin selection is much more widespread - because there are heuristics that allow organisms to favour their kin without the need to examine them closely - like: "be nice to your nestmates".
Simple limited dispersal often results in organisms being surrounded by their close kin - and this is a pretty common state of affairs for plants and fungi.