[BUG] Ctrl+O causes display corruption/text duplication in iTerm2

Description

Pressing Ctrl+O (toggle output expansion) in iTerm2 causes display corruption where text gets duplicated/repeated through the conversation above the current position. The corruption is visual only - transcript .jsonl files are unaffected.

Environment

• Claude Code version: 2.0.76
• Terminal: iTerm2 (Build 3.5.x)
• macOS: Sequoia
• TERM: xterm-256color

Steps to Reproduce

1. Start Claude Code session in iTerm2
2. Have some conversation history with expandable output
3. Press Ctrl+O to toggle output expansion
4. Observe text duplication/corruption in the display above

Expected Behavior

Display should toggle cleanly without corruption

Actual Behavior

Text from status line or other areas gets injected/repeated through conversation history. Sometimes requires Ctrl+L to fix.

Workaround

• Works correctly in Terminal.app
• Ctrl+L redraws and fixes the corruption

Related Issues

• #778 (Ctrl+R flickering)
• #8618 (display corruption)
• #14617 (narrow window corruption)