In my opinion, there's a jarring break from immersion surrounding the Outcast tag and how it's mechanically implemented. I feel that a lot of OOC conflict and confusion stems from the clash between the "This character is an outcast from society" label, and having no evidence of why the character is an outcast. The Wiki has some great suggestions for an Outcast's background, but there's no requirement to actually RP your Outcast as an Outcast, and all of the responsibility winds up on the heads of the bounty hunter, or lawkeeper, or paladin, to prove why the Outcast deserves their reputation.
So, maybe it would help if there's a system in place to add flavor and interaction to the Outcast system! Here's my idea:
At character creation, the Outcast has to pick a reason for being Outcast, such as: Convicted Criminal, Forbidden Magic, Cultist, etc etc...
Have an NPC in each settlement who will offer access to "Wanted!" or "Unwelcome!" posters. For a fee (or sweet-talking/intimidation, or having a status in the settlement) your character may read the posters. Then, for one ingame month, you are able to read outcast tags. Afterwards, you have to pay the fee again to refresh your knowledge of who's unwelcome. Maybe the Harpers, Zhentarim, and Radiant Heart could get free access to reading the posters as well.
And once you have the "Read The Wanted Posters" effect, you would see Outcast tags as "This character is considered an outcast from society because of their criminal history", or "This character is considered an outcast from society for dabbling in forbidden magic" and so forth.
Maybe Outcasts could also have access to an NPC that'd let them pay a fee to obscure their Outcast-ness, too?
I feel that if there was something like this in place, it'd add more flavor to the system and would also alleviate a good deal of the awkwardness and confusion that results from the current system.