If Target was really concerned about store size, or parking issues, they would have shut down the Uptown Centre location and rebuilt at Brookside Mall. Clearly instead, the draw power of the Mall District more than outweighed any parking concerns or other issues they may have though.
In the end, the 10 million (or however much the Uptown conversion is costing) is chump change compared to the amounts Target is putting in the Canadian launch. They're obviously doing what they can with what they got from the Zellers buy out, but we can be sure that once they're settled and are starting to look at store performances and such, they'll look at new stores or fixing issues at existing ones where needed. Maybe by then they'd be willing to just buy out Good Life/Moores/Reitmans/etc... to expand the parking and the store instead of building new.
As for the gut, Uptown Zellers certainly needed it. Considering their front Zellers sign burned last fall, they probably don't trust any wiring or plumbing or anything inside there.