I’d like to add some feedback to TRELLO-404.
My concern is not only about Suggestions. The labels dialog allocates a significant portion of its limited space to secondary UI elements such as Suggestions, the "Show more labels" button, and accessibility options.
As a result, the default view hides several existing labels. After expanding the list, all labels fit within essentially the same dialog, making the expanded view more useful for label selection than the default one.
I think the primary purpose of this dialog should be to display labels. An optional compact/clean view could be a good solution, allowing users who prefer suggestions and additional options to keep them, while users with many labels could see the full list immediately without extra clicks.