I would like to be able to sort the library in list view by 'Tags' as well as all the other currently sortable column headers. Currently if the 'Tags' column header is clicked on, the 'Sort ascending' or 'Sort descending' icon appears above column title but the column does not actually sort.
Agreed. However, items with multiple tags simply list them alphabetically at the end of the row. This means that for items with multiple tags, you will always be sorting by the tag that comes first, alphabetically. Is that what you want?