BUG (?): Label when dimming lights is not using label override

It’s by design. The device name is always used in the dimmer popup. The label is just changing the label of the tile itself.

You can update the device name in your source system, but of course that will change it everywhere.

PS. Your theme looks great! It looks really similar to a design that another user put together. Did you create the CSS from scratch or was it posted on the community somewhere?