We are currently using the SVN Tagging plugin for Hudson, though if
the tagging operation fails, the build is still successful. Why? Is
this expected behavior? I would consider the build broken, we tried to
use automatically tagging, though now have lost tags for the last 4
days as it just came to our attention.

Sample console output

moduleLocation: Remote ->http://svn.someserver.net
Tag Base URL: 'http://svn.someservernet/svn/sandbox/tags/hudson-project-227'.
There was no old tag at
http://svn.someserver.net/svn/sandbox/tags/hudson-project-227.
Subversion copy failed. svn: Commit failed (details follow):
svn: CHECKOUT of '/svn/sandbox/!svn/ver/928/tags': 403 Forbidden
(http://svn.smartequip.net)
Finished: SUCCESS