For example, if a tag has a red background and white text it will retain the black text if used in the post body. This makes it impossible to read.
I'm hoping this is not status-bydesign.
This is actually a fairly time consuming change (lots of little CSS tweaks to test in a bunch of browsers), and other issues* are taking up my time right now.
Will probably get around to this sometime shortly after Thanksgiving.
*And that mythical beast, "time off" is coming up as well.
This isn't a real answer, but here's a screen cap of what I see on this post from my work machine (Win7 + FF 3.6.12) after I edited in the tag syntax yesterday. Totally bizarre.