Suggested highlights (see the "How to Outline a Passage" video for more info on highlighting):

P1 — has appeared to mean cutting it loose from its author
P2 — seems to involve severing it from those who actually read it
P3 — But the formalist critic is concerned primarily with the work itself
P4 (part 1) — relevant part of the author’s intention is what the author actually put into the work
P4 (part 2) – assumes an ideal reader
P5 — But for the purpose of focusing on the poem rather than on the critic’s own reactions, it is a defensible strategy.
P6 — But the reduction of a work of literature to its causes does not constitute literary criticism; nor does an estimate of its effects.

(Please also note: it's not important that your highlighting matches mine exactly! There may be multiple good things to highlight in one paragraph. Your goal should be to mostly highlight similar points to the ones I show here even if they're not the exact same ones.)