[FEATURE] VS Code: collapse tool output to keep AI responses visible

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

In the VS Code chat panel, tool execution output (file reads, grep results, bash output) pushes the AI's conversational responses off screen. In long sessions with heavy tool use, the user's questions and the AI's answers become buried under tool output, making the conversation effectively unreadable.

Proposed Solution

Make tool output blocks collapsible/expandable (collapsed by default after completion). Or route tool output to a separate VS Code Output channel. Or keep the AI's text responses pinned/prioritized in the chat view.

Alternative Solutions

Users currently scroll extensively or ask the AI to repeat itself. Some use the /clear command frequently, losing conversation history.

Priority

Low - Nice to have

Feature Category

Interactive mode (TUI)

Use Case Example

During a debugging session, I ask Claude a question. It runs 5 tool calls (grep, read, bash, read, grep) before answering. By the time it answers, my question and its answer are both 3 screens up. I have to scroll to find what it said.

Additional Context

_No response_