Hi insanity:
I think you have to recognize that the school is expected to achieve a certain level of progress for every child beyond their KS2 performance: (e.g. www.education.gov.uk/schools/performance/archive/schools_10/s11.shtml) - so in order to achieve that they divide up progress into sub-levels across KS3/ KS4.
At present at end KS2 you're expected to be NC L4 and by end KS3 you're expected to be performing at Level 5/6.
So it isn't unreasonable for the school to be looking at your DD's NC L5+ results (I'm presuming as you said she exceeded NC L4 targets she achieved Nc L5+) and looking to move her to NC L7/8 by end of KS3 (end Year 9). Therefore the targets they've set are relatively high (most likely arrived at from a computer programme which probably reviews in school testing as much as KS2 SATs results).
Now, I'm just a Mum, but my advice is this. On the 'red' targets (and DD1 had 2 red targets in her best subjects and it was upsetting for the both of us) - look at where she is - if she's working at 5a and the target is 6c, well she's just one sub-level below expected performance. OK yes, if she's working flat out, studying every hour under the sun and really stressed - yes the target it too ambitious. But if she's not very seriously revising for tests, finishing homework in 5 minutes flat, doing very little extra reading (self-directed study), not reviewing her mistakes and learning from them - then there is all sorts of scope to raise that mark.
My view with DD1 is this - it's a target. Having high targets is no bad thing - it's a goal. I'm more concerned that she tries her best than that she actually achieves the target. Indeed, I think it is that process of trying to achieve which is valuable - not the certificate/ 'green' symbol on the report card/ etc... once you've achieved it. In both cases of DD1's 'reds' she was working one sub-level below expected target and the targets were very high. The school were clearly thrilled with her performance and felt that now she had settled (it was a bit bumpy at first - very few friends from her old school/ new situation) - anyway, they felt that she could knuckle down and it would be more than possible to go on and achieve those targets.
So I think part of this may be to change your view on targets - not to see them as putting 'too much pressure on' - but to see them as useful:
useful in terms of high standard of teaching for your child - teachers can't just coast - they're expected to be getting your child to a certain level (teaching that level curriculum/ assigning that level homeworks) - so she won't endlessly review perimeter/ area in maths if she's ready to be coping with volume of 3D shapes and calculating angles.
if you desire that your child does well at A-Level, the more work put in now, the better - and the more options for future she will have. The test date is coming - there's no stopping that - the more things your child covers now (mistakes/ difficulty or not) the easier it will be come GCSE/ A-Level.
If everything is easy and you never have to put effort in to achieve it - you do really 'freak out' once you hit a situation where that isn't the case - (at university/ work/ sport/ etc....). Far better to have high standards (personally imposed or externally imposed) and strive to achieve them - than to just paddle along. The reality is education/ employment is a competition (we tend to try very hard to avoid thinking about it in those terms - and that's regardless of whether your child is going for an apprenticeship/ a job/ or a university place.
HTH