Agreed. This is a most pressing concern!
However, this matter needs some consideration, as if you make clantags short, there's only so many combinations to go around, and if you make them long, you can clog up space avobe people's heads...
How about the following: The clan tags can be reused indefinitely by any amount of clans, but when you bring up the scoreboard (TAB key, I believe it's select in consoles? I dunno) it tells you the clan the tag belongs to.
Clans themselves have to be registered in-game, will have a leader and chosen "admins" (chosen by the leader that is). The clan will have a clan name (which can be long but must be unique) and a clan tag (which may be short and reused).
That way you can keep short tags (three-five letters) and avoid facing the problem of too many clans for the amount of available tags!