I’ve thought alot about the same issues with Subtext. Orginally my plan was to simply repurpose the existing category functionality by slapping a big tag sticker on its forehead and from henceforth, a category was really a tag. One big rename and bam!, I’m done.
But the API issue Duncan describes is a problem. After more thinking about it, I now plan to make tags a first class citizen alongside categories. In my mind, they serve different purposes.
I see categories as a structural element and navigational aid. It is a way to group posts into large high-level groupings. Use sparingly.
By contrast, I see tags as meta-data, use liberally.
One thought around the API issue is that there is a microformat for specifying tags (rel=”tag”) and Windows Live Writer has plugins for inserting tags into the body of a post.
My current thinking is to pursue parsing tags from posted content and using that to tag content.