I think it's time taxonomy module got some more love in core. Drag and drop etc. was nice to get in D6, but there's much more we could do. Also I keep seeing various taxonomy administration helper modules cropping up - which is good, but there's no core patches cropping up alongside them, which is a shame, so I'm starting this in the hope of generating some discussion about things we could do this release cycle.
There's three obvious areas where Taxonomy could use some help.
Moving terms between vocabularies.
Mass operations (delete, edit).
Editing individual terms quickly
Administration of large vocabularies
Mass addition of terms (the quickest way to add them at the moment is free tagging at node/add)
Cleaning up old crappy terms and preventing creation of new ones.
There are modules which deal with some or all of these, but some of them have serious UI issues (i.e. taxonomy_switch) and it's often necessary to install 4-5 different modules on one site if you need people without db access to manage large numbers of terms.
Apart from administration, the biggest problem IMO is mile long select lists:
Atttaching taxonomy terms to stuff other than nodes (fields in core)
Maybe try to get term_parents reworked to use the menu system, and move multiple parents to contrib (if this is even possible).
I reckon the quick wins would be:
term_edit and hierarchical select into core for D7.
Maybe adding a 'vocabulary' field to the term edit screen.
For mass administration I'm sure loads could be done with Views 2 but I've not looked into the possibilities in any depth.