[BUG] VSCode extension freezes when generating large file content for Write/Edit tools

Bug Description

The Claude Code VSCode extension freezes/hangs when Claude generates large content (600+ lines / ~18KB+) for the Write tool. The UI becomes unresponsive and the response never completes, requiring the user to interrupt.

Steps to Reproduce

1. Open Claude Code in VSCode extension
2. Ask Claude to rewrite a large file (~574 lines → ~850 lines)
3. Claude reads the file successfully, starts generating the new content
4. Extension freezes — no output appears, the response hangs indefinitely

Observations

| Operation | Result |
|-----------|--------|
| Read (any size) | ✅ Works |
| Write (small file, ~5 lines) | ✅ Works |
| Edit (small change) | ✅ Works |
| Write (large file, ~600+ lines) | ❌ Freezes |
| Task agent generating large prompt | ❌ Freezes |
| Background Task agent writing large file | ✅ Works |

Key finding

• A background agent (run_in_background: true) was able to generate and write the same large file successfully. This suggests the freeze is in the main conversation thread's content streaming/buffering, not in the Write tool itself.
• The freeze occurs during content generation (before the tool call is sent), not during file I/O.
• Reproduced 3 times consistently in the same session.

Environment

• Claude Code version: 2.1.31
• VSCode: Windows (win32)
• Model: claude-opus-4-5-20251101
• Platform: Windows 10/11

Expected Behavior

Claude should be able to generate and write large files (600-1000 lines) without the extension freezing.

Actual Behavior

The extension becomes unresponsive when Claude starts generating content for a large Write operation. The user must interrupt the request. The workaround is to use a background agent (run_in_background: true).

Workaround

Use Task tool with run_in_background: true to delegate large file writes to a background agent, which runs in a separate process and doesn't freeze.