Fiddled around a bit earlier. I am using 1680x1050.
I am using this setting:
AirFormat = {}
AirFormat[4000] = ""
AirFormat[16000] = "'"
ColorAliesSide = {0, 0, 0}
ColorEnemiesSide = {0, 0, 0}Color is 0,0,0 (black, friend and foe)
Like this you have a small black spot at 16km, no identification if it is enemy or friend, no additional infos.
The advantage of the black dot is that you cannot see them throught your cockpit while manouvering, makes it less of a "cheat".
Label dissapears entirely at 4km. As i have found 5km to be somekinda pixel pop-up distance.
It doesnt seem to be an extreme advantage on my lower resolution settings. At 16km the small black dot is still not easy to pickup if you dont know where to look exactly.
Hope this helps someone.
P.S.: Put a copy of the labels.lua into your C:\Users\<your name>\Saved Games\DCS\Config\View folder, as it is adviced in the readme.
EDIT: Added the file here incase anyone needs it. This file makes it so you only get labels for aircraft. Try it. (activated with shift+f10) Labels.lua