I just created a post on some meta site, and on clicking on the tags text entry and typing some text, I helpfully get a list of potential tags. Among them are those I am not allowed to use (e.g. the moderator-only status-completed).
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I'm pretty sure this will fall under the "don't hide things from users" category. By showing it and allowing you to attempt to add it to your post, you get a nice notification explaining why you can't do that, and you learn about them, without having to go read some boring FAQ.
You may complain that it's confusing to show those tags when you can't actually apply them. Another user may complain that it's confusing they can't find the red tags in the suggestions when they type "status." You can't appease both parties.
Now, if you were being shown a blacklisted tag, that would be another issue.