[Bug] Path Handling: Tilde Expansion and Inconsistent Path Resolution

Bug Description
Bug Report: Path Display Inconsistency and Missing Tilde Expansion

Title: UI displays tilde paths while tools use absolute paths, plus tools lack tilde expansion support

Description:
Claude Code has two related path handling issues:

1. The UI shows tilde paths (e.g., ~/.claude/context/CLAUDE.md) but tools actually use absolute paths (/Users/username/.claude/context/CLAUDE.md) behind the scenes
2. The tools themselves (Read, Write, Edit, etc.) cannot expand tilde paths, requiring hardcoded absolute paths

Steps to Reproduce:

1. Use Read tool with a tilde path like ~/.claude/context/CLAUDE.md
2. Observe the UI display shows the tilde path
3. Check that the read actually succeeds (due to behind-the-scenes expansion)
4. Try to use tilde paths directly in tool calls - they fail
5. Note the disconnect between displayed paths and execution requirements

Expected Behavior:

• Tools should natively support tilde expansion (~ → /Users/username on Mac, /home/username on Linux)
• UI should accurately reflect the paths being used
• Cross-platform compatibility should be maintained

Actual Behavior:

• UI displays: Read(~/.claude/context/CLAUDE.md)
• Tool actually requires: /Users/username/.claude/context/CLAUDE.md
• Tools fail if given actual tilde paths
• Forces hardcoding platform-specific absolute paths

Impact:

• Cross-platform compatibility issues: Hardcoded /Users/username/ paths break on Linux systems
• User confusion: UI shows tilde paths that don't actually work in tools
• Debugging difficulties: Inconsistency between displayed and required paths
• Maintenance burden: Need separate path configurations for Mac vs Linux
• Portability problems: Configurations can't be shared across platforms

Use Case:
Users want to write portable configurations using ~/.claude/context/ that work on both Mac (/Users/username/.claude/) and Linux (/home/username/.claude/) without
hardcoding platform-specific paths.

Environment:

• Working directory: /Users/username/projects/ProjectName/.claude
• Platform: macOS (Darwin 24.6.0)

Suggested Fix:

1. Add native tilde expansion support to all file tools (Read, Write, Edit, etc.)
2. Either show actual resolved paths in UI or add visual indicator for path expansion
3. Ensure consistent behavior between UI display and tool execution

Environment Info

• Platform: darwin
• Terminal: ghostty
• Version: 1.0.113
• Feedback ID: 5c1c1951-2b60-49ca-b1e6-84d489ace357

Errors

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