I'd prefer labelled text input as well, and I'd be fine with option #2. Currently the tags display in a slightly smaller font than the default text-snippet font, so setting that small font to be used for labels as well would be great to help use as little space as possible.
Most of the labelled fields won't run onto two lines, and if they do it'll take a bit more space but it won't look terrible - It's not as if there's excess whitespace in this interface at the moment, if anything, I could do with just a little MORE between snippets and sections
