VS Code extension: add a setting to collapse/hide tool-use cards by default

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

What I'm trying to do
Reduce visual noise in the Claude Code chat panel. During normal work the assistant runs a lot of tool calls (Bash commands, file reads, greps), and each one renders as a tool-use card. On a long task the chat becomes mostly tool cards, and my actual messages from Claude get lost in the wall of them.

What I expected
Turning Verbose off would hide this. It doesn't — verbose only trims the output text inside a card; the cards themselves still render for every tool call. There's no setting, /config toggle, or keybinding in the VS Code extension to hide or auto-collapse them.

Proposed Solution

Add a setting to the VS Code extension (and its settings.json schema), e.g.:

claudeCode.collapseToolCardsByDefault (boolean) — render tool-use cards collapsed to a single summary line (e.g. "Bash — git log …" or "Called Bash 3×"), expandable on click.
Optionally claudeCode.hideToolCards (boolean) — hide tool cards entirely, showing only Claude's prose messages + a small "N tool calls" affordance to reveal them.
Ideally paired with a command/keybinding to toggle collapse/expand for the current transcript, matching the terminal CLI's Ctrl+O transcript-collapse behavior (which the extension currently has no equivalent for).

Why
The native VS Code panel is the better experience (clickable file:line links, rich rendering), so "switch to terminal mode for Ctrl+O" isn't a great workaround — it trades away the panel's core benefits just to quiet the cards. A collapse setting lets users keep the panel and keep their own messages readable.

Workaround today
Run Claude Code in VS Code's integrated terminal (/config → Use Terminal), where Ctrl+O collapses tool output — but this loses the native panel's clickable links and rendering.

Environment
Claude Code: VS Code extension (native panel, not terminal mode)
OS: Windows 11

Alternative Solutions

_No response_

Priority

Low - Nice to have

Feature Category

CLI commands and flags

Use Case Example

_No response_

Additional Context

_No response_