My 2 cents worth will be close to Keith's.
Optics is one area where you almost always get what you pay for. Maybe not every, single time. But far more often than not.
I guess it depends on what your scope demands are. Cheap scopes suck. They "work" but they suck. If you're just trying to gaze through one at a shooting range, at a black and white target down range, it will "work", that is one thing. If you're trying to hunt with one in changing light conditions, it can be vastly different. Light transmission is only part of it, it's also color transmission, contrast, is that gray smudge a deer or an old tree trunk?
Also, when you're at the range and the scope goes south, you cuss a little maybe, and pack it in and go home for the day. If you're not shooting a match, it's really nothing lost. If you're on a hunt, or especially a big game hunt, and your scope goes south, man, that's an entirely different set of headaches. A "bad" or broken scope will take your rifle out of action.
In response to your example of the Leupold-vs-NC Star scope, I will have to say I've never looked through an NC Star brand scope. However, if it's really 1/20th the cost of a Leupold, I think I can live without one.
I DO have some "cheap" scopes (under $100), but they have their places. I've bought a couple of Burris scopes and a Pentax on discount for under $100 that will do nicely for rimfires, etc. I'm not an "optics snob" or anything, but I did start off as a young lad with "cheap" scopes. I can afford better scopes now, still not Swarovski or Zeiss, but pretty decent glass in Nikon, Burris, and yes Leupold. I like to shop around. Don't be afraid to look through a bunch of scopes in a store. Take them outside and look through them at dawn and dusk if they'll let you (most will, but they will come with you of course).
My brother hunted with a junk scope until I forced him to use my rifle one year with a Leupold on it (I had taken my deer opening morning, and put my rifle in his hands, and took the bolt out of his gun and told him he couldn't have it back until nightfall). All he had to do was hunt with it ONE time, and he was convinced.
I have Burris Full Field 2's/ Black Diamond, Nikon's Pro Staff/ Buckmaster/ and Monarch, and Leupold Vari-x 1's, 2's, and a fixed power, Weaver Grand Slam, and a TC fixed power. The only scope I've ever broken was a Bushnell that broke internally on the 3rd shot from a 30-06 ( I think it was a "Banner"?).
Life's too short to shoot with a piece of junk scope.
Oh, I forgot to add, handguns scopes all seem to cost more than their rifle scope equivalents do. I don't know why either, but they do.