Quite simple (hopefully), use the text slot above the hotbar (like when playing a disc on a jukebox), for stuff like widget labels, this would also improve the experience as it would only tell you the widget you would influence, instead of showing labels in-world for a bunch of stuff nearby.
In addition, this would remove the issue of not hiding the labels when hiding the HUD (F1)

This would require some changes in UMC to expose that property and would likely be a config graphics setting