That page is to show off their work, which it does. The goal is probably not to replace news.ycombinator.com.

I would agree, for me the bright blue tag with the sharp box really makes it hard to scan the headlines without a ton of concentration ignoring the tags separately.

Agreed. Tag colours draw too much attention, particularly contrasted against visited links.

Custom tag groups could be a useful extension.

I find the white on light blue very unreadable.

Same first impression. No subtlety there