I don't think the prices would be considered outrageous at Sephora, but Sephora has successfully branded itself a 'high-end' store, whereas Target is a sort of bridge between low-and-mid, depending on what you're shopping for. Their designer collaborations in terms of clothing have been pretty successful, for instance.
I suppose the difference is, people go into a Sephora prepared to spend twenty or so bucks on an eyeshadow, while people go into Target expecting a much cheaper thrill. Makeup shopping at Target is generally an impulse decision, while purchases made at Sephora are usually more thought-out. For a lot of people, an impulse buy isn't going to be a twenty dollar eyeshadow, it'll be more in the range of five bucks or so.
Also, Sephoras are few and far between for a lot of people, so to have more 'premium' makeup available at a large chain is a good thing for shoppers living in smaller towns. I think it's going to be successful for Target, if the products are good quality. Like I said, their clothing collaborations have been very well-received.
That all being said, I'm looking forward to trying out these lines, and I'm not turned off by the prices and them being available at Target. Where you buy something doesn't change the quality, and if they get good reviews I'm all for it! I hope at least one of them has some good primers and a range of foundation shades, because those are products sorely lacking in the usual drugstore fare.