First of all, please allow me to say that indeed there is no way to prevent showing labels when the mode is AerialOnDemand. This is due to the specifications, which are outlined in the bing documentation. Additionally, as you have already observed, the api does not return images for some zoom levels.
That said, the described scenario seems to be a valid one and I have logged in a new feature request in our feedback portal for this functionality: Map: Implement scaled images for BingRestMapProvider in Aerial mode when the ZoomLevel is high
. You can follow it in order to get notified for any developments. I have also added some telerik points to your account as a small gesture of gratitude for bringing this to our attention.
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