UX Bug: ESC key should close diff modal before interrupting agent

Problem

When viewing a file diff in the Claude Code VSCode extension, pressing ESC causes two unintended actions:

1. Closes the diff modal (intended)
2. Interrupts the running Claude agent (NOT intended)

Expected Behavior

ESC key should follow standard modal focus hierarchy:

• If a modal/dialog is open: ESC closes only the modal
• If no modal is open: ESC interrupts the agent

Current Behavior

ESC triggers both the modal close AND agent interrupt simultaneously, causing frustration and workflow disruption.

User Impact

• High frustration for keyboard-driven workflows
• Forces users to use mouse to close modals (violates accessibility best practices)
• Frequent unintended interruptions break flow state
• Violates 40+ years of UI conventions (ESC closes topmost UI element first)

Steps to Reproduce

1. Start a Claude Code session that shows file diffs
2. Click "Show more" on a diff to open the diff modal
3. Press ESC key expecting to close the modal
4. Observe: Modal closes AND Claude agent is interrupted

Environment

• Platform: Windows (likely affects all platforms)
• VSCode extension: Claude Code
• User workflow: Keyboard-heavy, minimal mouse usage

Suggested Fix

Implement proper event handling priority:

// Pseudocode
onEscapeKey(() => {
  if (isModalOpen()) {
    closeModal();
    event.stopPropagation(); // Don't propagate to global handlers
  } else {
    interruptAgent();
  }
});

Priority

Major UX issue - Affects core interaction pattern, impacts user productivity significantly.

Related

This follows standard UI toolkit behavior (React Modal, Bootstrap Modal, Windows dialogs, macOS dialogs, etc.)