> No, this should not be necessary.  You have a problem with parsing,
> seemingly.  C-c C-e should place the first label by itself, and M-RET
> should place \\ and another label.
Typing C-c C-e equation I indeed get \label by itself but not in the align env.

> What does
> C-h v LaTeX-item-list RET
> report?

LaTeX-item-list is a variable defined in 
`/usr/share/emacs-snapshot/site-lisp/auctex/latex.elc'.
Its value is 
(("description" . LaTeX-item-argument)
 ("thebibliography" . LaTeX-item-bib))



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