Genres work as tags to help you find what you're looking for. When you look for "FPS", both cod and bf come up. You then DO YOUR OWN RESEARCH to find what is right for you, the genre tags just help you narrow down what you are looking for. combining FPS and RPG can help you find games like fallout if thats what you want.
I cant really tell whats going on at the bottom? Are you supporting custom tags? Are you supporting it to a degree? Were you trying to set up some slippery slope to prove a hypothetical alternate tagging system (that you devised in the first place) is stupid? im a bit lost there.
Again, with the last paragraph you (and i) seem kinda lost 0_o. i dont think you get the point of genre tags very well. they are just to classify games to help find what you are looking for and weed out what you aren't. your proposing a hypothetical they become more complicated than they are (AAS, ASS, CAS, NFASRPG), then saying "its too complicated lets remove tags!", which would only make it even more complicated to find what you're looking for.