I've heard of the sand and dirt piles often. If you're willing to do the work for a sand pile thats boxed in, I would suggest another look at simply building a good back stop (maybe a couple stall matts suspended and 6" behind that a soft wood wall), and then just buying a large target like a "blob" target. It can be dressed up well, easy to maintain, safe (I always imagine a ricochet where the sand pile acts like a take off ramp for an arrow, unlikely as that is), and probably not too awful much more money than a boxed in sand pile, though probably a bit more cost to the one I described.
If you do go the sand route I agree sifting is a must, and the dirt/sand mix is genius. For the sake of cleanliness though just have a good erosion plan or you could end up with a mud slick after every hard rain.