[BUG] Copy-paste of simple text lines have a huge LAG

Preflight Checklist

• [ ] 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?

Issue in VS Code that appeared immediately after Claude Code extension upgrade to latest version 2.0.3.
using npm global package @anthropic-ai/claude-code@2.0.1

Copy-paste of simple text lines have a huge LAG.
Small circle hourglass that rotates do appear when I paste, takes 1-2 seconds to actually paste one single text line.
If I disable Claude Code extension all returns to normal, copy-paste works instantly.

Copy-paste is done only in code files in a very slow manner, not to/from Claude Code terminal.
Actually you don't even have to open any Claude Code session.

What Should Happen?

VS Code copy-paste works instantly on text

Error Messages/Logs

Steps to Reproduce

1. Have Claude Code extension installed in VS Code. No need to open any session with Claude Code.
2. Copy-paste lines of comments, paste part completes in about 1-2 seconds.

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.0.1 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_