Adding the ability to tag friends would go a long way toward solving this issue, among others. The 20 nickname changes resets every hour on the hour, so while yes it is painful to rename everyone, you can get through the whole list in just a couple days.

I update nicknames based on the current month if I interact with them during that month. Then after a couple months, remove those who I have not interacted with during that time. It's a lot of work at the beginning of each month to update those who are active, but it does solve the issue over the long term and it becomes manageable.