I thin the current tagging function looks great in a tutorial or demonstration, as it looks like there would be some face recognition. But is to cumbersome to use.
Such a simplified tagging method would also work great if there was a larger thumbnail on upload.
It would also work great to implement on a thumbnail view of albums and categories.
I also think it would make sense to put a menu icon for this function where the "set avatar" button is now. and move the "set avatar" to the dropdown menu.