[BUG] Up arrow history no longer preserves pastes, freezes process

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?

Previously, cycling through history with the up arrow preserved pasted text - sections like

[Pasted text #1 +47 lines]

would include the original pasted text when the prompt was submitted a second time.

It seems this has regressed, and now it literally sends the string "[Pasted text #1 +47 lines]" to the LLM.

Further, upon seeing this, the LLM responds with "waiting for the paste from stdin" or similar, and the whole process freezes until manually kiilled.

What Should Happen?

Claude should remember the pasted text for future submissions of the same historical prompt.

Error Messages/Logs

Steps to Reproduce

1. Paste some text into a prompt and send it
2. Upon completion, hit up arrow and send the prompt again
3. Observe that Claude cannot see the pasted text the second time.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.72 (Claude Code)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

Claude is running in tmux inside Ubuntu VM running on Macos host