[FEATURE] Syntax highlighting for code blocks in VS Code chat panel

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

Code blocks in the VS Code extension's chat panel are rendered without syntax highlighting, making it harder to read code compared to competitors like GitHub Copilot Chat.

All code blocks render as plain monospace text regardless of the language tag.

Proposed Solution

Code blocks with language identifiers (e.g. `python ) should display with proper syntax highlighting using VS Code's TextMate grammar or Monaco editor.

Alternative Solutions

_No response_

Priority

Critical - Blocking my work

Feature Category

CLI commands and flags

Use Case Example

_No response_

Additional Context

_No response_