Hey @SteveHill3D,
Storing a tool state in a tag is possible, but a bit unusual. But generally you are on the right track. Tags are also internally often used as hidden data containers. When you write a modelling tool, you probably already found out that points and polygons are are actually stored in hidden tags on objects.
I am not sure though if using tags in tools is a good advice, as injecting all that data all the time into the scene graph is probably not the fastest. It depends a bit on what you are doing, but in general the solution is a bit unusual.
Cheers,
Ferdinand