I guess it will depend on the connection type. If it's USB you may be able to use extenders but I know there is a limit to USB data transmission.
Well I have learned that it will connect via USB 3.0, but you are right about the limit to extenders. The max I have seen at the moment is about 20 feet, but perhaps there are longer cables available now.
Kinect currently has this issue and the PS Eye has similar. Hardwiring your console so that it absolutely must connect to the camera should be an outrage of invasion of privacy and dumb engineering. We'll see if they stick to this, just like they mentioned that the device needs to download daily updates from the internet.