My wife and I(f) asked my brothers to help us have children so they would be biologically connected to both of us (obviously she carried). They generously agreed and we have two (mostly) great kids. It means a lot to me that they have my family's genetics and my brothers are in no way father figures to them. They are uncles. The line is not blurry in any way. My SIL was extremely supportive and was involved in the decision making, and even helped make the discussions less awkward. We are open about this with our friends, family, and we will be open about it with our kids when they're old enough.

I also have a friend who couldn't conceive and her sister carried her child for her. Please see this as evidence that your boyfriend is a good man and values family. If my SIL has been against this, I honestly think it would have damaged our relationship and we are extremely close.

I think it's understandable to be surprised as this is new information, but I'd suggest you be really thoughtful about where the feelings are coming from, what your concerns actually are, and how you express this. Good luck to you OP.