Large permissions allow list in settings.local.json causes startup hang in iTerm2

Description

Claude Code hangs indefinitely on startup when the project's .claude/settings.local.json contains a large permissions.allow list (~73 entries). The issue is specific to interactive mode - claude -p and claude doctor still work.

Environment

• Claude Code: Tested on both 2.1.44 (stable) and 2.1.56 (latest)
• Terminal: iTerm2 3.6.6 (hangs) vs Terminal.app (works fine)
• OS: macOS 26.4 (Darwin 25.4.0)
• Node: v25.2.1
• Shell: zsh

Steps to Reproduce

1. Have a .claude/settings.local.json with a large permissions.allow list (73 entries in our case)
2. Some entries contained paths with spaces and various escaping patterns:

• Double-escaped: Bash(/Volumes/RAID/Options\\\\ Trading\\\\ --\\\\ Zen/venv/bin/pip show:*)
• Quoted with spaces: Bash("/Volumes/RAID/Options Trading -- Zen/venv/bin/python3" scripts/...)
• Backslash-escaped: Bash(/Users/jimperkins/Options\\ Trading\\ --\\ Zen/venv/bin/python3:*)

1. Launch claude in interactive mode from the project directory in iTerm2
2. Claude hangs indefinitely - no output, no UI rendered

What works

• claude -p "say hello" works (after MCP startup delay)
• claude doctor works
• claude from a different project directory (without the large permissions list) works in iTerm2
• claude from the same directory works in Terminal.app
• Removing permissions from settings.local.json (keeping only env) fixes the hang immediately

Diagnostic Steps Taken

1. Confirmed TTY detection correct in iTerm2 (test -t 0 and test -t 1 both pass)
2. Disabled iTerm2 shell integration - no effect
3. Tested with --strict-mcp-config --mcp-config '{}' - still hung
4. Removed MCP servers from .claude.json - still hung
5. Removed settings.local.json entirely - fixed
6. Reduced permissions list from 73 to 38 entries (removing stale/escaped paths) - still hung
7. Removed permissions block, kept only env - fixed

Workaround

Remove the permissions block from .claude/settings.local.json. If running with --dangerously-skip-permissions, the allow list is unused anyway.

Notes

• The permissions list accumulated organically over time from approving tool calls
• A cleaned-up 38-entry list (no problematic escaping) also caused hangs, suggesting it may be the list size or specific pattern matching interacting with terminal rendering
• Only affects interactive mode, not print mode or subcommands
• Only reproduces in iTerm2, not Terminal.app