In my opinion the “Press enter to create tag” line should be the last one in the list.
The first one should be the result with the best current matching tag.
This would save a lot cursor down keying and it would prevent tags that are created by mistake.
I agree the tagging menu can be improved to reduce the effort needed to add existing tags. Right now it’s a little to easy to create new tags, while selecting existing tags is more difficult than necessary.