How can I control where the label appears? Ideally I’d like it to set above the connection at the target end.
We set the label automatically to the center of the created connection. That’s our BPMN specific behavior. If you want to change that, you’ll have to override the existing LabelBehavior. Also cf. to this thread.
Secondly, how can I style the labels - e.g. set a background color or a border, etc?
You will have to create a custom renderer that overrides the existing label rendering.