Yeah, in general I'm a strong partisan of the "less is more" policy regarding GUIs and colors...
For me, too much information kills information (especially with colors) —hence the benefit of the new Instant Color Filters, btw!
But how to implement this is a bit tricky... (I don't think it should be mixed with the Color Filters button, it would risk introducing confusion.)
Here's a suggestion:
1st step:
- Just create a #command, that any "tweaker" can use at her/his own "risk".
2nd step (later):
- Add a "Toggle Labels Visibility" entry in the menu of buttons "Apply Label" and "Find by Label" ("Labeling people" will probably have them active), and in menu "Favorites".
- Overlay —if possible— a red diagonal/slash on top of the "Find by Label" icon, when visibility is off.
3rd step (much later):
- automatically activate visibility of Labels whenever a Label-related action is run (add, remove, find).
But steps 2 and 3 imply more work, and interfering with working functions...
So in the meantime, most people interested in this visibility ability would have the command to implement in their own CTB!