VS Code extension: long pasted prompt fills the whole screen with no way to collapse it while the agent responds

What happened

In the Claude Code VS Code extension, when I start a new session and submit a long prompt (e.g. a big block of pasted text), the submitted prompt message renders at full height and takes up almost the entire chat panel. There is no way to collapse it, so while the agent is generating its response I can't see the response — the giant prompt bubble stays expanded and pushes everything off screen until the turn finishes.

It's worse than a during-turn annoyance: the prompt stays expanded even after the turn finishes, and it does not collapse after restarting the session window either. So the oversized prompt bubble keeps eating the panel permanently for that session.

Expected

Long submitted user messages should be collapsible or auto-condensed with a "show more" toggle (like the terminal CLI shortens long pastes to [Pasted text #1 +N lines]), so the conversation stays readable — during the turn, after it, and across session-window restarts.

Actual

The full pasted text is shown at full height with no collapse control. It stays that way for the whole session and persists across a session-window restart.

Steps to reproduce

1. Open a new session in the VS Code extension.
2. Paste a long block of text (e.g. 30+ lines) as the prompt and submit.
3. While the agent is responding, observe that the prompt bubble occupies nearly the whole panel with no way to collapse it.
4. After the turn finishes, and after restarting the session window, observe the prompt is still fully expanded.

Environment

• Claude Code VS Code extension
• Platform: macOS (Darwin 25.5.0)

Suggested fix

Collapse long user messages by default (or add a collapse toggle), mirroring the CLI's pasted-text shortening behavior, and persist that collapsed state across session-window restarts.