What if you just remove the tag when someone becomes invisible, and return the tag on invisble ends. This won't bug the name tags on invisible in 1.8 than. I know this works you just need to put the time and effort in it.

It's not a bad idea. However, I'm going to place this on hold for a moment as once 1.13.x comes out. We may have major changes in the way Nametags work. So, if we go in that direction it would likely be possible.

Pleaaaaaaaase fix this, we really need a sooner fix of this. Its a really good idea to turn off the tag when it is detected that the player has Invisibility effect and when it ends, it turns on the nametag again

i made a plugin that checks for invisibility and removes the tag if anyone wants to try https://phanaticmc.com/stuff/NametagInvisFix.jar

this is a big problem on factions / pvp servers so a sooner than later fix would be nice

I guess this will never be implemented :(