About the EpubCheck error: your nested CSS doesn't break any EPUB rule. EPUB 3.3 asks only three things of a style sheet: no direction property, no unicode-bidi, and UTF-8 or UTF-16. Nesting is standard CSS now. EpubCheck's CSS parser doesn't know it yet, so it reports CSS-008 at the &. I've added that to your issue, and linked it from a wider one I had opened:
w3c/epubcheck#1768. With your div.chapquote block,
EpubCheck 5.4.0 gives four CSS-008 errors, and
epubveri 0.41.0, my own validator, gives none.
That only settles whether the book is valid, though. As JSWolf and KevinH said, many reading systems don't apply nested rules yet. So writing them out flat, as you ended up doing, is still the safe choice for a book people will read on a device.