[BUG] Claude Code VS Code Plugin freezes and lags with high-reasoning models; hooks fire before rendering catches up

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?

The VS Code plugin becomes extremely laggy and frequently freezes/unresponsive when paired with models that produce large amounts of thinking/reasoning output (e.g., DS V4 Pro with extended chain-of-thought).

What Should Happen?

• The plugin should render streaming output (including long thinking blocks) smoothly without freezing the UI.
• Hook lifecycle (e.g., Stop hook) should stay synchronized with the rendered stream — a hook should not fire before the corresponding stage has been rendered and is visible to the user.
• The UI should remain responsive to input while a response is streaming.

Error Messages/Logs

Steps to Reproduce

1. Install the Claude Code VS Code plugin.
2. Select a high-reasoning model (e.g., V4 Pro / v4pro) that generates long thinking output.
3. Start a task that produces a long chain-of-thought followed by multiple tool calls (e.g., "refactor this multi-file project and explain your reasoning").
4. Observe the plugin as the thinking stream renders:

• The transcript stutters and the window becomes unresponsive.
• A Stop hook (if configured) fires while the visible stream is still far behind the hook's triggering point.

1. Note that the same prompt in the CLI renders the reasoning output smoothly.

Claude Model

Other

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.260

Platform

Other

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_