In an ideal world all threads are prefixed with tags, the whole idea of a tag system is to make searching for that subject really easy. If it's a design issue we can take care of that, but to me it seems like removing it defeats the purpose of indexed topics.
There is a big difference between tagging something for the search feature and selecting the "Use first tag as prefix" option.
Searching is good, thus tags are good.
That I can find, a "prefix" has no value. All the info needed is (should be) written up in the thread title.
Prefixes are ugly, overused, and even worse, redundant. Redundancy is a key design flaw.
Readability is sacrificed for what?
This is pretty simple. Remove the "Use first tag as prefix" option. We don't need it, it doesn't do anything. Don't try to get too fancy. Simplicity is king.