Good question. I think most hobbyists are in the same boat. In my case I made 5 frames for myself (3 of them ridden regularly over 3 years) then 4 more for friends at the cost of materials. I'm considering building for more distant friends and charging a bit for my time.

What's ethical is to make a good frame & fork. Some time back I sent out parts (fork and stem) for fatigue testing to get an idea of where I was standing. Quite instructive and not that expensive. Another way is to have some sort of insurance, but that makes more sense if you have an actual business.

Anything will fail at some point. So you need to gain experience and test what you make. I figure it takes 5-10 frames to develop a good feel for the process (and lots of practice joints for autopsy purposes), and probably 20-30 to gain a legitimate confidence? The in-between period is a bit of a catch-22. Not sure what the answer is...