Quote by Chet_Morton
the IF designation is absolutely required
Correct.
Quote by Chet_Morton
Suppose a story is a poem [or micro/flash] involving a polarizing category
As kistin says, IF tops everything because it has a user switch for it, regardless of format. A poem or micro with IF content goes in IF. Always.
Otherwise, as seeker says, your category reflects the dominant topic, with tags acting as thematic indicators to allow people to use the category and tags search filters to hunt for things they like in combination. Tags can make a huge difference to discoverability, so using popular tags and combos helps stories be discovered by others reading those topics (tags and the category are also used as matches at the bottom of stories to offer "other stories you may like").
Using your own weird tags or overly specific tags is counter productive. For example "54-year-old man seduces teen" is likely to get zero hits and zero searches. But "older man" is currently used on around 700 stories, "older man/younger woman" is used on around 350 stories, and the "seduction" and "teen" tags both have thousands. So the chances of it matching other stories with those tags in combination are quite high, and significantly more likely to get visibility than the specific tag.