In this paper, we present a new concept of optical packet/burst switching suitable for generalized multiprotocol label switched (GMPLS)-based optical networks. In such networks, optical labeled switched Paths are being established in a similar way as label-switched paths in MPLS. We use a wavelength label as well as an orthogonally modulated label, with respect to the payload modulation format, and which is encoded using either frequency-shift keying (FSK) or differential phase-shift keying (DPSK). Wavelength is used for switching in the node, whereas the orthogonal label defines the label-switched path. We present both simulation and experimental results to assess transmission performance of the proposed combined modulation scheme. In addition, we propose a suitable optical node architecture that can take advantage of this stacked label concept. Toward this, we use widely tunable wavelength converters to efficiently route IM/FSK (or IM/DPSK) optically labeled packets in an arrayed-waveguide grating (AWG)-based node structure. We present performance simulation results in terms of packet loss ratio and internal block probability. Internal blocking is an inherent problem of AWG optical routers, and a specific wavelength assignment algorithm has been developed to minimize it. Finally, the feasibility of IM/FSK transmission is experimentally demonstrated over an 88-km single-mode fiber span, and novel aspects of FSK generation and detection techniques are presented.