[BUG] Claude Code Extension causes nonstop IDE rendering glitch

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

When using The Claude Code vs code extension, it will cause infinite re-renders when trying to interact with any other part of the IDE. Whenever claude code is running in the extension, trying to evn hover the mouse on other files in the open editor or interacting with other open files will cause rerenders that make the IDE mostly unusable

What Should Happen?

The extension should be able to run without rendering affecting any other part of the IDE

Error Messages/Logs

N/A

Steps to Reproduce

1. Run the Clause Code exetnsion in VS Code or Curosr
2. Have Claude do some work and click on text box in extension
3. During the task, try to interact with the rest of the IDE (hover mouse over file explorer, try to click on or scroll through a README, etc)

observer flickering that happens until claude stops in the extension

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.49

Platform

Other

Operating System

macOS

Terminal/Shell

Cursor

Additional Information

I see this happen specifically when claude is running a tool command like Bash or Read or Edit, etc

_No response_