I use labels as a way of organizing files in the Finder and letting me know which ones still need work doing on them.
I have discovered that Lion's item arrangement settings (found on the Finder toolbar) provide a useful and simple way to quickly change labels from one colour to another.
To do this, set to arrange by Label and simply drag files between the different categories (ie Red, Blue, No Label, etc.) to change the label of that file to the appropriate color.
Two caveats:
Mac OS X Hints
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