A couple of articles that might be helpful.
Giving a few key points to address the OP’s questions -
Are costs prohibitive? Yes, but that’s a so far. The iP1 mentioned in @Strassia’s post (great info BTW) is no longer for sale, but when it was available, ran @ $1600 -1800 (!!!) for the paired gun and watch, and was only .22 LR. Which is over 4x the cost of a normal, well made .22 Semi-auto. Prices for the next generations have not been released, and at least one is planned in the common 9mm, but prices will have to come down a lot to be seen as not burdensome.
On a note as to if it actually works… kinda/sorta. One, this is a RFID style device, so it pairs over short range to keep the pistol activated. According to the articles, people were able use a jammer to prevent it’s operation with parts costing around $20. My research into the biometric options have come up with zero prototypes, but at least one aftermarket option that was a $400 add-on and only worked on 1911 frames. Mechanically, the only test I found mentioning the iP1 found it to have substantial Failures to Fire (which were likely mechanical and could be smoothed out if it had ever made it to major production) and slowness in pairing.
Does the idea have merit. Now we’re into IMHO territory. I’m a gun owner, and currently have a permit to carry concealed, although I rarely do so. Would I buy a smartgun if they worked out the flaws? Probably not, because I already own my own weapons. Even if it was able to get costs to say, 25-50% above a ‘dumb’ weapon, it would be why buy a pricy new car when the current one works as well or better?
Now, if I had kids in the house, I would probably have 2 or 3 more thinks, but honestly, I’d probably sell or get rid of them if that were the case. I care about home defense and preparation, and have previously been in a job where self defense was a concern, but not now. Which brings me to my personal concern - the people who would likely be the marketing target of the smartgun are first time buyers, the ones who would have the least experience in protecting themselves from all the ways firearms and their safety features can fail, smart or not.
Personally, unless a smartgun program is paired with a (very) expensive gun buyback initiative, it’s not going to get rid of the issue with the countless ‘dumb’ firearms that will remain in the system. The more . . . adamant . . . members of the firearms community will actually put a premium on such weapons, and on the other hand, confiscating/banning all ‘dumb’ guns but allowing smart guns seems like a half-step doomed to piss off both sides.
My final $0.02. There isn’t (yet) a good test bed for these. If any of the companies mentioned in the article gets a solid model out of prototyping, in a useable caliber, and meeting the dependability requirements of the police, that would be the best next step. Police departments have regular churn of old weapons (I own a post Detroit PD pistol that they sold via a retail estabilshment), and are probably the most at risk of someone using a personal firearm against them. If it works to their specifications, then we’d be in a good place to move forward on a nationwide level.
But absent substantial political changes or financial investment, it does nothing to address the millions of existing weapons, most of which will last decades (or longer) with even the most basic care. So . . . it’s worth looking at, I just don’t think it will be an effective answer. We will probably be looking at generational changes in attitudes making a big difference in legislation before the existing weapons are old enough to be replaced.