The underlying problem, I suspect, is the different desires for physical / social intimacy. So long as that exists, you're going to have some level of awkwardness and deadweight loss, and the question is where it falls.

In general the solution to that problem is reading body language of other people. Hug people with body language that indicate they want to be hugged and don't hug people with body language that doesn't look like they want to be hugged.

For me having the tags lead to hugging certain people who I wouldn't have hugged based on their body language and my whole calibration for when to initiate physical contact stopped working well. Especially for those people whose position probably is: "I almost never hug anyone, so it's a bit at the edge of my comfort zone. On the other hand I believe that the idea of hugging is beneficial and sort of nice."

I still think the tag system if perfect for a gathering of rationalists who like to have clear rules of how to interact with one another.