VS Code: Local sessions sidebar ignores useTerminal setting, opens native UI instead of terminal

Description

When claudeCode.useTerminal is set to true in VS Code settings, the "Open Claude Code" button correctly opens Claude Code in the VS Code integrated terminal. However, clicking on local sessions in the VS Code sidebar still opens them in the Claude Code native UI/app instead of in a terminal tab.

Expected behavior

Clicking a local session in the sidebar should open it in the VS Code integrated terminal (respecting the useTerminal setting), the same way the "Open Claude Code" button does.

Actual behavior

• "Open Claude Code" button → opens in VS Code integrated terminal ✅
• Clicking a local session in the sidebar → opens in the Claude Code native app ❌

Steps to reproduce

1. Install Claude Code VS Code extension
2. Set claudeCode.useTerminal to true in VS Code settings
3. Reload VS Code
4. Click "Open Claude Code" — opens correctly in the integrated terminal
5. Click on any local session in the sidebar — opens in the native Claude Code app instead

Workaround

Resume sessions from the integrated terminal using claude --resume which shows an interactive session picker.

Environment

• macOS (Darwin 25.3.0)
• VS Code with Claude Code extension