While Hervé, owned by the BCBG Max Azria Group, is a fairly upscale brand--at least in terms of price--the partnership makes sense.
Avon's definitely made a push to be more fashion-conscious as of late, particularly with its fresher Mark. collection, which was fronted by Lauren Conrad for some time. (She was just replaced by Twilight's Ashley Greene.) And Hervé appeals to the affluent-but-accessible consumer who reads US Weekly but can afford Purple.
(Avon also produces fragrances for Christian Lacroix, Emanuel Ungaro and Cynthia Rowley. And it's launching Fergie's new fragrance, which will be called Outspoken. No comment on the absurdity of that last info nugget.)
For those who might not be able to afford a Hervé dress, ordering a piece of the brand via Avon might be the next best thing.