To answer my own question for any souls interested:
I've found the "mute label" is part of the png file for the actual button so that's easy to edit out (although not height-dependently)
The volume label is addressed in the rtcofig and here is the edited code to make it height dependent:
Code:
set tcp.volume.label tcp.volume{w}==0 [0] h>46 + cm + * maxfolderdepth [18] [7 27 45 9 0 0 0 0] h>46 + cm + * maxfolderdepth [18] [7 27 45 9 0 0 0 0]