VS Code extension: tool call output needs secondary visual hierarchy

Preflight Checklist

• [x] I have searched existing requests and this feature hasn't been requested yet
• [x] This is a single feature request (not multiple features)

Problem Statement

Problem

In the VS Code extension, tool call outputs (Bash, Grep, Read, Edit, etc.) are rendered with the same font size, weight, and visual prominence as the assistant's actual response text. This makes the chat very hard to read — the important information (the assistant's answer) gets lost between large blocks of tool call details, error tracebacks, permission prompts, and search results.

Current behavior

Tool call blocks are fully expanded by default
Same monospace font size as the response
Error tracebacks can fill the entire viewport
"No matches found" results occupy as much space as actual answers
Permission prompts ("Allow Bash to execute?") have equal visual weight

Expected behavior

Tool calls should have secondary visual hierarchy:

Collapsed by default (expandable on click)
Smaller font size or muted color (grey)
Compact single-line summary (e.g., "Grep: 3 matches in urbanroi.css")
The assistant's response text should be visually dominant

Why it matters

The terminal experience is more compact, but lacks mouse support — so there's no good middle ground today.

Environment

VS Code on Windows 11
Claude Code extension (Opus 4.6, Claude Max)

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Proposed Solution

Tool call outputs (Bash, Grep, Read, Edit, etc.) should have secondary visual treatment compared to the assistant's response text:

1. Collapsed by default — expandable on click
2. Smaller font size or muted color (grey) compared to response text
3. Compact single-line summary instead of full expanded output (e.g., "Grep: 3 matches in urbanroi.css")
4. The assistant's actual response should be visually dominant

Currently in the VS Code extension, tool calls render with identical font size, weight, and prominence as the response. Error tracebacks, "No matches found" results, and permission prompts all occupy the same visual space as the actual answer — making the chat very hard to read.
The terminal experience is more compact (spinners instead of blocks), but lacks mouse support. There's no good middle ground for users who want both a clean UI and mouse interaction.

Alternative Solutions

_No response_

Priority

Critical - Blocking my work

Feature Category

CLI commands and flags

Use Case Example

_No response_

Additional Context

_No response_