Thinking about this and re-found this discussion. What I love and am using currently is:
- Using watched words to add Tags automatically to new topics.
- Tag icons.
- Tag Banners for descriptions.
- Tag Styles for colors
- Subscribing to tags via rss.
- Grouping Tags together as Tag Groups.
I think it would be a most excellent next step to expand Tag Groups
- allow linking to the Tag group via url
- allow Tag Group icons
- Banner descriptions
- Stylings, to match the replaced categories.
For me, this would take the place of the average category. If form templates end up supporting tags we will really only need categories for special uses and group/trust level restrictions. 
I also like it because it could prove very, very organized while greatly reducing the number of categories required by a forum.
Thanks either way for considering my dreams. 