Board Thread:Show-Related Questions and Answers/@comment-24304025-20141219181020/@comment-25355646-20141219234831

Leopold did recognize Cora in 1x18, AH stated this already (I think he confirmed it on Twitter).

I always assumed that Leopold assumed Regina was Cora's first born because he wouldn't know that Cora had two daughters. Leopold wouldn't know that the daughter's name is Zelena because she was named by her adoptive mother in Oz. He probably thought Cora was strong enough and brave enough to keep her child even though she was under terrible poor conditions in the society where she would be branded as a whore. Leopold was also probably impressed that Cora managed to marry a prince and become rich. So maybe Leopold agreed to marry Regina as a way to make it up to Cora for either casting her away or not forgiving her for lying to him during their engagement.