The label of an icon in the icon view corresponds to the first column in the list view, and the length of the label text is equal to the width of the column; so you have to open the desktop with a normal window, reduce the width of the first column as you like, exit the tracker and that’s it
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If you don’t want to use ALT+K to clean everything up - sometimes this can slightly mess up carefully arranged icon groups - you can just hold ALT while drag’n’dropping icons. They’ll snapp to the grid.
A neat trick, but waaay to complicated for non-contortionists. 
ETA: I had an idea on that and added a comment to an existing ticket: #16315 (Tracker should wrap long file names) – Haiku
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Don’t like it when it’s a mess at the Desktop, this way I know where to find something if I need it 
currently this is the only current way to have a shorter label and I know it seems a bit convoluted, especially in written form, but in reality it takes just a few steps
beside this, +1 about your idea