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Bypass Permissions now actually works. Sessions in Bypass mode were silently denying every command with "running in don't ask mode" because the sidecar never enabled the SDK flag that Bypass requires. Since Bypass is the default mode for new sessions, this could affect fresh sessions too — not just live mode switches. Proven end-to-end: a Bypass session now runs tools with no denial, and switching to Bypass mid-session takes effect immediately.
The mode pill can no longer lie. If a live permission-mode switch is rejected, the pill reverts to the mode the session is actually in and you get a notification, instead of showing a mode that isn't really active.
Changed
The mode picker now mirrors Anthropic's official VS Code extension — five modes: Ask before edits · Edit automatically · Plan mode · Auto mode · Bypass permissions. The old "Don't ask" mode was removed; any session or default still set to it falls back to Ask before edits.