[BUG] v2.1.23 causes VS Code Extension Host to pin ~30% CPU while idle, cursor flickering, unusable chat panels

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?

After updating to v2.1.23, VS Code becomes nearly unusable. Rolling back to v2.1.22 immediately resolved all symptoms.

• Extension Host subprocess at ~30% CPU continuously, even when idle (killing it closes VS Code)
• Multiple other VS Code subprocesses also spike in CPU, pushing total well beyond 30%
• Only one Claude Code chat panel works at a time; others go blank or accept no input
• Cursor flickers rapidly between states when hovering over text (rapid switching between text-selection and pointer cursor)
• VS Code sluggish across the board, not just Claude Code panels

What Should Happen?

Near 0% CPU when Claude Code is idle. All chat panels should be usable. No cursor flickering.

Steps to Reproduce

1. Install Claude Code VS Code extension v2.1.23
2. Open a workspace
3. Observe Task Manager — VS Code subprocesses spike in CPU with no Claude session active

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.22

Claude Code Version

2.1.23

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

• CPU: Intel Core i5-9500 @ 3.00GHz (6 cores, no hyperthreading) — 30% CPU means nearly 2 full cores pinned
• RAM: 32 GB (not a factor, issue is purely CPU)
• Workaround: Roll back to v2.1.22
• The cursor flickering and multi-panel breakdown suggest a render loop introduced in this version. The v2.1.23 changelog mentions "Improved terminal rendering performance with optimized screen data layout" which may be related.