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Metal targets can be safe. There are many ranges that use them. But certain precautions must be taken. For you, using a larger target that is hanging you should have little concern except getting the steel and having them cut out. Do some web searching for steel recommendations. I used to manufacture metallic silhouette targets and used T1A a steel used in the mining industry.
To hang your targets use chain welded to the top back of the targets. This will allow the target to swing back and your bullet, or fragments to deflect downwards. If you weld near the center of the target it will not swing as well and will deflect the bullet or fragments almost straight back towards the shooter.
However, from what you describe, having houses behind your proposed targets, even if at a distance and on a hill is, in my non-legal opinion, asking for trouble.
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