You do not pass an external dictionary (file) into this syspref. You actually pass the location of ispell on your box. If you have ispell but do not enter its path here, the pref does not trigger the spell check. So it is also enable/disable ispell. Tags.pm requires the Ispell module; it is not a mandatory depends. Furthermore the pref description says: Allow tags in the dictionary of the ispell executable on the server to be approved without moderation. So I would not mind a better name :)
Do you have a suggestion?
IspellPath?
TagsDictionary?