@Andereoo, commented saying Do you know of any ways to keep the cursor updated without showing the label?

Use frame.itemconfigure

Snippet:

def on_mouse_motion(event):
    p = frame.create_text((event.x, event.y))
    if event.x > 200:
        frame2.config(cursor="xterm")         
        frame.itemconfigure(p, text=(event.x, event.y)) #<== Add this        
    else:
        frame2.config(cursor="crosshair")

Screenshot: