[BUG] VS Code extension (graphical panel): thinking blocks cannot be collapsed by click or any keyboard shortcut

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Thinking/reasoning blocks render fully expanded in the conversation with no way to collapse or hide them, and alwaysThinkingEnabled/effort settings don't affect this — it's a display-only issue. This differs slightly from #55120/#59358/#55366 (missing chevron) and #64714 (chevron removed, Ctrl+O keyboard-only workaround) in that none of the documented workarounds have any effect at all in my setup:

What Should Happen?

Either:

• The documented Ctrl+O shortcut (or a rebindable equivalent) should actually work in the graphical panel, taking priority over VS Code's own global keybindings while the Claude panel is focused, OR
• ~/.claude/keybindings.json rebinds should apply to the graphical panel the same way they do in terminal mode, OR
• Provide a dedicated VS Code extension setting (e.g. claudeCode.hideThinkingBlocks or similar, as requested in #52640) so users aren't dependent on keybinding plumbing at all.

Steps to Reproduce

1. Click on the block — no response (matches #55120/#59358/#55366).
2. Ctrl+O (documented default) — intercepted by VS Code's own "Open File" command before reaching the panel.
3. Ctrl+Alt+O (attempted rebind) — intercepted by an installed Remote Development extension ("Select an option to open a Remote Window").
4. Rebinding via ~/.claude/keybindings.json (app:toggleTranscript → ctrl+shift+alt+o) — has no effect whatsoever, confirming keybindings.json is only consumed by the terminal/CLI TUI (per https://code.claude.com/docs/en/keybindings, which exclusively discusses terminal/tmux/screen semantics) and is not wired up to the graphical webview panel at all.

Is this a regression?

I don't know

Claude Code Version

2.1.201

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

Related issues
#52640, #55120, #59358, #64714, #55366