Thank you both so much @Abhishek and @samliew. With your help I was able to solve the issues! For the sake of an easy and clear response, I will summarise your replies in one post and mark it as solved.
Issue n°1 - Iterations going past the aggregator and performing too many steps instead of combined into one:
I solved this by setting the Source module of the Array aggregator to the Iterator itself.
Issue n°2 - Cannot get the correct the correct label pulled into the “variable value”:
as per Samliew’s response (Updating or posting a Wordpress post with multiple tags created with an Iterator module - #7 by samliew), I needed to hover the mouse over the label to get the accurate case-sensitive key to use.
Issue n°3 - Tags not updating correctly for Wordpress post:
The solution provided by @Abhishek worked well (Updating or posting a Wordpress post with multiple tags created with an Iterator module - #4 by Abhishek). I still had to add another step to publish the post and be able to get back the value of the post url, but it is a very good workaround the tags update issue.
Issue n°4 - Aggregator not returning tag IDs if Post ID is also being aggregated:
I still think that this is a bug that should be fixed in the future to save others a lot of struggling (Updating or posting a Wordpress post with multiple tags created with an Iterator module - #5 by EaZyGreen).
Thanks again for both of your help, I really appreciate it.
All the best,
Alex