[cherry-pick] [cherry-pick] agentHost: Preserve workspace transition boundaries

[vs-code-engineering]

Cherry-pick of #334694 from release/1.137.

⚠️ This cherry-pick has merge conflicts that need manual resolution. Conflict markers (<<<<<<</=======/>>>>>>>) are committed to the branch — check it out locally, resolve, and force-push.

git fetch origin cherry-pick/334694 && git checkout cherry-pick/334694
# resolve conflicts, then:
git add -A && git commit --amend --no-edit && git push --force-with-lease

Conflicting files:

• src/vs/workbench/contrib/chat/test/browser/widget/chatListRenderer.test.ts

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Summary

Backport of #334534 to release/1.137.

• skip workspace trust prompts when effective permissions are Allow All or global auto-approve is enabled
• preserve the always-visible Now working in workspace transition boundary across collapsed progress and Agent Host restarts
• hide the internal continuation request while preserving provider output and file-change attribution
• persist transition state atomically and serialize transition restoration with turn-ID mapping writes
• expose truncated transition labels through the standard hover service

This branch contains only the five commits from #334534. The prerequisite workspace-conversion implementation from #334250 is already present on release/1.137.

Validation

• npm run typecheck-client
• targeted ESLint across all 26 changed TypeScript files
• targeted Stylelint for the transition CSS
• npm run transpile-client
• 848 focused unit tests passed, 38 pending
• git diff --check

[Copilot]

🟡 Changes recommended

Unresolved merge-conflict markers are committed, which will break parsing/compilation and must be resolved before approval.

Once you've addressed the issues Copilot identified, you can request another Copilot review.

Pull request overview

Backport/cherry-pick to release/1.137 for the agent host workspace-conversion UX, focused on preserving the always-visible “Now working in” workspace transition boundary across collapsed progress and restarts.

Changes:

• Preserve workspace transition boundaries across collapsed completed steps and Agent Host restarts.
• Skip workspace trust prompts when effective permissions are “Allow All” or global auto-approve is enabled.
• Persist/restore transition state atomically while hiding the internal continuation request but keeping attribution.

Blocking issue observed: merge-conflict markers are committed in src/vs/workbench/contrib/chat/test/browser/widget/chatListRenderer.test.ts (and also present in extensions/copilot/script/test/scoredEditsReconciler.spec.ts in this branch snapshot), so the branch will not compile/test until conflicts are resolved.

File summaries

File	Description
src/vs/workbench/contrib/chat/test/browser/widget/chatListRenderer.test.ts	Test setup for workspace transition rendering currently contains unresolved merge-conflict markers that must be resolved.

Review details

• Files reviewed: 1/1 changed files
• Comments generated: 1
• Review effort level: Lite

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[Benjamin Christopher Simmonds (benibenj)]

merge markers!