Making it clear which items in a long list are selected

I'm trying to design a portion of a web interface that allows users to tag items and view all items with a tag or set of tags on them - think gmail, if gmail allowed you to easily select multiple tags to view all messages with all of those tags. What's the best way to show the user which set of tags they're currently viewing?

Simple highlighting works for one tag, but if the list of tags is longer than the screen they won't be able to see all of them at once, leading to it not being clear which tags the user has selected. Adding to this problem, I've got a small amount of space to work with - the entire tag and item interface is about 300x500 pixels, so displaying selected tags in a long horizontal list isn't an option.

I was thinking of creating a secondary list on the top of the tag list with the selected tags (sort of like those drop-down lists that have the USA and other countries emphasized), but I'm wondering if there's a better alternative.