I wholeheartedly support this suggestion! It's easy enough to re-order your ignored and favorite tags if you've only got a few, but I'm neither a web developer, nor an applications developer. There's so much jquery stuff on SO that it's hard to find the stuff I'm interested in if I don't filter it out. My preferences look like this:
Quick - Am I ignoring the silverlight tag or not? You'll see silverlight-3.0 and silverlight-4.0 on the left below the actionscript and facebook tags, but silverlight isn't there. If I suddenly see a silverlight-5.0 question (does that exist yet?) I'm going to also want to ignore silverlight and all its associated versions. The current setup makes it difficult to scan, CTRL-F works but my eyes could do it quickly if the list was alphabetized. (Quicker on the prefs page at least; this list is about 2 1/2 times the height of my browser when it's next to the questions feed, so CTRL-F is quicker than scrolling).
Let's ask "Why shouldn't it be sorted alphabetically?" instead of asking why it should be. For my use case, I have no need to sort by time. I can't conceive of a use case that would be.