Is there a way to automatically add a tag to a song once its added to a smart playlist in itunes? I have a playlist folder called Stars. Inside it I have 5 smart playlists. one playlist for each star rating. 1 star, 2 stars...etc. is there a way for itunes to automatically write a '1' in the grouping tag when i rate a track with one star? thanks!
Short answer: No.

Long answer, still no, but there are workaround. You cannot have the label added in the grouping tag as soon as you rate the track. However, you can write a small Apple-Script that you would setup to run everyday (or every hour, or anything else) that would scan your iTunes library and write the tag to the tracks, depending on their rating.