Hi Gary,
It sounds like you have a good technical understanding of how labels work (stored in extended attributes). The app does indeed use the extended attribute API to read and write tags. That is because that is the only API that works on both Mac and iOS.
However, I am unclear about the problem you are seeing. The app is storing the string for the label and it is reading the color + the label name from the system to provide the UI.
Strings are the only way labels work in the Finder (color is not actually stored as part of the file’s tag – just the tag name). Nitro uses the same names as the Finder. If you add tags to the Finder (or change names), the app will use them (you have to quit and reopen the app for it to read those though).