FAN OF F1

I am a current owner of the following cars : 2002 225hp TT, 2002 225hp TT ALMS, and 2000 A4 Avant 1.8T. I also previously owned a 2000 A4 1.8T sedan. I tell you this to prove that I am an Audi fan and love the cars. All of my cars have been Quattro.
I am thinking of buying a 2004 S4 Avant and trading my A4 Avant for it, but I am concerned about one thing. The S4 seems to be priced very high considering where the competition is. Audi has always had a niche of providing a BMW/Benz quality car for several thousand less. Recently , Audi seems to be asking equivalent prices for equivalent models and sometimes more. Do you think that Audi can realistically do this? An example would be the RS6. Nicely equipped at $83K vs a similarly equipped M5 at $73K. Even the new M5 coming out next year with a v10 and 550hp is only supposed to hit the high 70s.
I think that Audi is starting to stretch the limit of what they can ask for their cars and sales will suffer. They are moving out of their niche and I am not sure they can pull it off.
I welcome all opinions. I love Audi and this was not meant to bash them, but to voice a concern of mine.

S4saken

I'll certainly keep my current S4 as a daily driver, but I just don't see the additional $10K of value in the new car. Maybe if I drive one I'll feel differently.