[FEATURE] Setting to collapse tool output to a single line in interactive mode

Feature request

Add a setting that collapses tool calls in the interactive view to a single line (tool name + command only), with no output preview lines.

// settings.json
{
  "defaultToolOutputState": "collapsed"  // "collapsed" | "preview" (current default)
}

Problem

In interactive mode, every tool call (Bash, Edit, Read, ...) renders the command plus a 3–4 line output preview before truncating to … +N lines (ctrl+o to expand). In tool-heavy sessions this fills the terminal quickly and pushes the assistant's actual responses off-screen, so users constantly lose their place and scroll back up.

The preview line count is currently fixed: there is no setting, flag, or env var to reduce it. Ctrl+O only goes the other direction (expand into the transcript viewer).

What I'd like instead, when collapsed:

● Bash(npm test)
● Edit(src/app.ts)
● Read(README.md)

One line per tool call. Full output stays available via Ctrl+O transcript viewer exactly as today — nothing is lost, it's just not rendered inline by default.

Why a setting rather than a fixed change

Some users rely on the inline preview to passively monitor what Claude is doing; others (like me) primarily review via Ctrl+O and want maximum screen space for the conversation itself. A settings.json key serves both without changing the default.

Prior related issues

• #38403 — "VS Code: collapse tool output to keep AI responses visible" (closed, not planned)
• #12589 — "Configurable output collapse threshold" (closed as duplicate)
• #36462 — "Terminal UI: collapsible sections and section navigation" (closed, not planned)

Those asked for interactive collapse/expand widgets or VS Code UI work. This request is intentionally narrower: a static display preference for the existing renderer — render the already-existing one-line header and skip the preview block. No new interaction model, no per-block toggling state.

Environment

• Platform: Windows 11, PowerShell / Windows Terminal
• Claude Code CLI, interactive mode