I must use Frontier Flying Service frequently as there are only two carriers that include my work site destination. I don't really have a choice as my company takes care of the travel arrangements in anycase.
I don't really have a problem with such a tag but I condider this:
FFS is a small carrier. They don't use TSA, any equipment, or security check procedures - they have different rules. They do not check you or your bags in anyway. As far as I know, they do not use standard baggage/cargo handlers - they are the ones handling your luggage. Long arms cases are always known to contain firearms no matter what the carrier so it's obvious if you have a long gun. When travelling via FFS, I can literally see my luggage and firearms cases in the back of the flight cabin which inspires more confidence in me than losing sight of them from the moment I hand them over to the moment I pick them up.
If there is a baggage handler that has sticky fingers, the absence of a visible tag is not going to prevent them from rifling through your luggage. The flight is limited as is the handling of your baggage so if your luggage is stolen, it's a little easier to peg the responsible party than when flying a standard airline.
In my experience arguing with the carrier will not get you any satisfaction, and if anything all that will happen is that you will not get on your flight, be able to transport your effects, or you will permanently be banned. In another incident where someone caused quite a commotion over mishandled NFA firearms - all that gentleman got was the general ban of any NFA for EVERYBODY (gee, thanks dude!) on that carrier (AK Air).
Due to the nature of my flights with FFS, the tag doesn't bother me in the least as has no practical effect IMO. Such a policy will assuredly be felt about differently by different people.
I actually enjoy the casualness of the smaller carriers as I and my luggage don't have to go through a bunch of time consuming security BS of the larger carriers. I show up, hand them my luggage, then walk out a simple door to the plane when it comes time. Lack of security doesn't bother me much because I am in the camp that current security procedures are pretty much feel-good measures at best. If someone wants to get a weapon on a flight it's still not that hard as unannounced tests always show. Thieves will still go through your luggage tag or no and long guns will always be known from beginning to end of the process.