I don't believe you can hydrate tags with the LBAPI. What I would do instead is use the WSAPI create a hash map which maps the tags Object ID to its name. Here's some code to get that done:
Ext.create('Rally.data.WsapiDataStore', {
limit : Infinity,
model : 'Tag',
fetch : ['ObjectID','Name']
}).load({
callback: function(store) {
var tagNameMap = Ext.create('Ext.util.HashMap');
Ext.Array.each(store.getRecords(), function(record) {
tagNameMap.add(record.get('ObjectID'), record.get('Name'));
});
getDefects(tagNameMap); //Pass the tag name map to the LBAPI request
}
});
Now just use tagNameMap.get(tagOID) to get the name of the tag.
Hope this helps :)