Yes, the app Turtl (https://turtlapp.com) does do this and it's not slow at all really. It only decrypts data upon viewing, and immediately re-encrypts when saving data. So this is actually entirely reasonable and entirely doable. The benefits are that malicious applications can't read data just sitting on the hard drive, which removes an entire class of attacks. An encrypted hd doesn't help you when it's unlocked.
This is the one problem I don’t know how to go about solving for tens of thousands of notes.
If anyone has any solutions, please share.
Then you can hash the labels and keep an index of the hash. You can also symmetrically encrypt the hash, or slugify it first. The index can be a file, or many, that you load in memory and keep updated / synced on changes.
You can then do label-based searches on your notes by first hashing the input string and searching for an exact match in the index.
For something like full text search on encrypted data, I guess you'd need to use a database that already does that.
I suspect this is just a dev with a fetish for obsessing over security. Like putting an expensive lock on a cheap bike!