Sorry about the radio silence. This is annoying, indeed. Your best bet in the short term is doing what you've figured out and including the choice name lookup in a bigger expression that will force recomputation.
The engine tries to be smart about when it recomputes dynamic labels because it can be expensive to go through all of them for long forms. Currently language change does not trigger recomputation. It likely should at some point but that's probably not a simple addition.
You may also be interested in some of what I described at Accessing translations to use within XLSForm - #2 by LN.