From 41aeb30016a76d5bf8093fba7c4d028e0f96bf1a Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:32:45 +0530
Subject: [PATCH 01/15] perf(output): add token-aware budget contract

---
 internal/tools/output_budget.go      | 156 +++++++++++++++++++++++++++
 internal/tools/output_budget_test.go |  74 +++++++++++++
 2 files changed, 230 insertions(+)
 create mode 100644 internal/tools/output_budget_test.go

diff --git a/internal/tools/output_budget.go b/internal/tools/output_budget.go
index e9a699f3d..e21bdf22c 100644
--- a/internal/tools/output_budget.go
+++ b/internal/tools/output_budget.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 	"strconv"
 	"strings"
+	"unicode/utf8"
 )
 
 const (
@@ -11,6 +12,161 @@ const (
 	searchOutputBudgetBytes = 64 * 1024
 )
 
+// outputCategory selects the deterministic retention policy used for a tool
+// result. It is deliberately internal: categories are an implementation detail
+// of the tools boundary, not part of Zero's public tool protocol.
+type outputCategory string
+
+const (
+	outputCategoryDefault outputCategory = "default"
+	outputCategoryFile    outputCategory = "file"
+	outputCategorySearch  outputCategory = "search"
+	outputCategoryTest    outputCategory = "test"
+	outputCategoryProcess outputCategory = "process"
+	outputCategoryDiff    outputCategory = "diff"
+	outputCategoryWorker  outputCategory = "worker"
+)
+
+// outputBudget combines a provider-neutral estimated-token target with the
+// existing byte ceiling. The byte ceiling is always authoritative: semantic
+// retention may use fewer bytes, but can never use more.
+type outputBudget struct {
+	maxEstimatedTokens int
+	hardMaxBytes       int
+}
+
+// budgetedOutput describes the text retained by a semantic output policy. The
+// original size is the output received by this layer; it does not claim to be
+// every byte an underlying subprocess may have produced before its own capture
+// limits were applied.
+type budgetedOutput struct {
+	text                    string
+	originalBytes           int
+	retainedBytes           int
+	estimatedOriginalTokens int
+	estimatedRetainedTokens int
+	truncated               bool
+	category                outputCategory
+	reason                  string
+	spillPath               string
+}
+
+// outputPolicyProvider optionally assigns a semantic category to a tool call.
+// Tools that do not implement it use outputCategoryDefault.
+type outputPolicyProvider interface {
+	outputCategory(args map[string]any) outputCategory
+}
+
+// estimateOutputTokens is a deterministic, provider-neutral estimate used only
+// for output budgeting. It is not exact provider tokenization. ASCII non-space
+// text uses the repository's established four-bytes-per-token approximation;
+// each byte of non-ASCII UTF-8 is counted as a token, intentionally
+// overestimating multilingual text and emoji rather than letting them bypass a
+// budget. Existing hard byte ceilings remain the final safety limit.
+func estimateOutputTokens(value string) int {
+	asciiNonSpace := 0
+	nonASCIIBytes := 0
+	for index := 0; index < len(value); {
+		r, size := utf8.DecodeRuneInString(value[index:])
+		if r == utf8.RuneError && size == 1 {
+			// Invalid input is charged conservatively one token per byte. Budget
+			// slicing itself remains rune-safe for valid UTF-8 tool output.
+			nonASCIIBytes++
+			index++
+			continue
+		}
+		if r <= utf8.RuneSelf {
+			switch r {
+			case ' ', '\t', '\n', '\r', '\f', '\v':
+			default:
+				asciiNonSpace++
+			}
+		} else {
+			nonASCIIBytes += size
+		}
+		index += size
+	}
+	return (asciiNonSpace+3)/4 + nonASCIIBytes
+}
+
+const defaultSemanticTruncationNotice = "\n[zero] output truncated\n"
+
+// budgetDefaultOutput applies the safe fallback policy: retain a rune-safe head
+// and tail around a stable truncation notice. Small output is returned
+// byte-identically. Spill creation is intentionally handled by the shared
+// boundary integration so every semantic policy uses the existing spill path.
+func budgetDefaultOutput(output string, budget outputBudget) budgetedOutput {
+	result := budgetedOutput{
+		text:                    output,
+		originalBytes:           len(output),
+		retainedBytes:           len(output),
+		estimatedOriginalTokens: estimateOutputTokens(output),
+		estimatedRetainedTokens: estimateOutputTokens(output),
+		category:                outputCategoryDefault,
+	}
+	if fitsOutputBudget(output, budget) {
+		return result
+	}
+
+	reason := outputBudgetReason(result.originalBytes, result.estimatedOriginalTokens, budget)
+	maxContentBytes := len(output)
+	if budget.hardMaxBytes > 0 {
+		maxContentBytes = min(maxContentBytes, max(0, budget.hardMaxBytes-len(defaultSemanticTruncationNotice)))
+	}
+
+	// Find the largest deterministic head+tail window that satisfies both the
+	// estimate and the hard byte ceiling. fitsOutputBudget is monotonic as this
+	// window grows, so binary search avoids repeatedly trimming one rune at a time.
+	low, high := 0, maxContentBytes
+	best := defaultSemanticTruncationNotice
+	for low <= high {
+		window := low + (high-low)/2
+		candidate := defaultHeadTail(output, window)
+		if fitsOutputBudget(candidate, budget) {
+			best = candidate
+			low = window + 1
+		} else {
+			high = window - 1
+		}
+	}
+
+	result.text = best
+	result.retainedBytes = len(best)
+	result.estimatedRetainedTokens = estimateOutputTokens(best)
+	result.truncated = true
+	result.reason = reason
+	return result
+}
+
+func defaultHeadTail(output string, contentBytes int) string {
+	if contentBytes <= 0 {
+		return defaultSemanticTruncationNotice
+	}
+	headBytes := contentBytes / 2
+	tailBytes := contentBytes - headBytes
+	return utf8Prefix(output, headBytes) + defaultSemanticTruncationNotice + utf8Suffix(output, tailBytes)
+}
+
+func fitsOutputBudget(output string, budget outputBudget) bool {
+	if budget.hardMaxBytes > 0 && len(output) > budget.hardMaxBytes {
+		return false
+	}
+	return budget.maxEstimatedTokens <= 0 || estimateOutputTokens(output) <= budget.maxEstimatedTokens
+}
+
+func outputBudgetReason(originalBytes int, estimatedTokens int, budget outputBudget) string {
+	overTokens := budget.maxEstimatedTokens > 0 && estimatedTokens > budget.maxEstimatedTokens
+	overBytes := budget.hardMaxBytes > 0 && originalBytes > budget.hardMaxBytes
+	switch {
+	case overTokens && overBytes:
+		return "token_and_byte_budget"
+	case overTokens:
+		return "estimated_token_budget"
+	default:
+		return "hard_byte_ceiling"
+	}
+}
+
 type outputBudgetResult struct {
 	Output       string
 	Truncated    bool
diff --git a/internal/tools/output_budget_test.go b/internal/tools/output_budget_test.go
new file mode 100644
index 000000000..845a97fdb
--- /dev/null
+++ b/internal/tools/output_budget_test.go
@@ -0,0 +1,74 @@
+package tools
+
+import (
+	"strings"
+	"testing"
+	"unicode/utf8"
+)
+
+func TestEstimateOutputTokensASCIIAndUnicode(t *testing.T) {
+	if got := estimateOutputTokens("abcd efgh"); got != 2 {
+		t.Fatalf("ASCII estimate = %d, want 2", got)
+	}
+	unicodeText := "🙂界"
+	if got := estimateOutputTokens(unicodeText); got < len([]byte(unicodeText)) {
+		t.Fatalf("Unicode estimate = %d, want conservative estimate >= %d", got, len([]byte(unicodeText)))
+	}
+	if first, second := estimateOutputTokens(unicodeText), estimateOutputTokens(unicodeText); first != second {
+		t.Fatalf("estimator is not deterministic: %d != %d", first, second)
+	}
+}
+
+func TestBudgetDefaultOutputLeavesSmallOutputByteIdentical(t *testing.T) {
+	input := "small output\nwith spacing\n"
+	got := budgetDefaultOutput(input, outputBudget{maxEstimatedTokens: 100, hardMaxBytes: 1024})
+	if got.text != input {
+		t.Fatalf("small output changed: got %q want %q", got.text, input)
+	}
+	if got.truncated || got.originalBytes != len(input) || got.retainedBytes != len(input) {
+		t.Fatalf("unexpected small-output metadata: %#v", got)
+	}
+}
+
+func TestBudgetDefaultOutputKeepsUTF8HeadTailWithinHardCeiling(t *testing.T) {
+	input := "HEAD🙂\n" + strings.Repeat("界", 200) + "\nTAIL🙂"
+	const hardMax = 120
+	got := budgetDefaultOutput(input, outputBudget{maxEstimatedTokens: 10_000, hardMaxBytes: hardMax})
+	if !got.truncated {
+		t.Fatal("large output was not truncated")
+	}
+	if len(got.text) > hardMax {
+		t.Fatalf("retained %d bytes, hard ceiling %d", len(got.text), hardMax)
+	}
+	if !utf8.ValidString(got.text) {
+		t.Fatalf("budgeted output is invalid UTF-8: %q", got.text)
+	}
+	for _, want := range []string{"HEAD", "TAIL", "output truncated"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("budgeted output missing %q: %q", want, got.text)
+		}
+	}
+}
+
+func TestBudgetDefaultOutputHonorsEstimatedTokenBudget(t *testing.T) {
+	input := strings.Repeat("🙂", 100)
+	got := budgetDefaultOutput(input, outputBudget{maxEstimatedTokens: 60, hardMaxBytes: 1024})
+	if !got.truncated || got.reason != "estimated_token_budget" {
+		t.Fatalf("unexpected token-budget result: %#v", got)
+	}
+	if got.estimatedRetainedTokens > 60 {
+		t.Fatalf("retained estimate = %d, budget 60", got.estimatedRetainedTokens)
+	}
+}
+
+func TestBudgetDefaultOutputDeterministic(t *testing.T) {
+	input := "head\n" + strings.Repeat("same line\n", 1000) + "tail\n"
+	budget := outputBudget{maxEstimatedTokens: 80, hardMaxBytes: 512}
+	want := budgetDefaultOutput(input, budget)
+	for iteration := 0; iteration < 20; iteration++ {
+		got := budgetDefaultOutput(input, budget)
+		if got != want {
+			t.Fatalf("iteration %d differs:\n got %#v\nwant %#v", iteration, got, want)
+		}
+	}
+}

From eeda3de2add239d728338d5b3940eedf2148fdf5 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:35:05 +0530
Subject: [PATCH 02/15] perf(output): add semantic retention policies

---
 internal/tools/output_policies.go      | 341 +++++++++++++++++++++++++
 internal/tools/output_policies_test.go | 112 ++++++++
 2 files changed, 453 insertions(+)
 create mode 100644 internal/tools/output_policies.go
 create mode 100644 internal/tools/output_policies_test.go

diff --git a/internal/tools/output_policies.go b/internal/tools/output_policies.go
new file mode 100644
index 000000000..646112a27
--- /dev/null
+++ b/internal/tools/output_policies.go
@@ -0,0 +1,341 @@
+package tools
+
+import (
+	"fmt"
+	"sort"
+	"strconv"
+	"strings"
+)
+
+// budgetSemanticOutput applies the deterministic policy for category. The
+// caller supplies output after secret redaction. Small results pass through
+// byte-identically; only oversized results are semantically reduced.
+func budgetSemanticOutput(output string, category outputCategory, budget outputBudget) budgetedOutput {
+	if category == "" {
+		category = outputCategoryDefault
+	}
+	if fitsOutputBudget(output, budget) {
+		return unchangedBudgetedOutput(output, category)
+	}
+
+	var retained string
+	switch category {
+	case outputCategoryFile:
+		retained = budgetFileLines(output, budget)
+	case outputCategorySearch:
+		retained = budgetSearchLines(output, budget)
+	case outputCategoryTest:
+		retained = budgetTestLines(output, budget)
+	case outputCategoryProcess:
+		retained = budgetProcessLines(output, budget)
+	case outputCategoryDiff:
+		retained = budgetDiffUnits(output, budget)
+	case outputCategoryWorker:
+		retained = budgetWorkerLines(output, budget)
+	default:
+		return budgetDefaultOutput(output, budget)
+	}
+
+	if retained == "" || !fitsOutputBudget(retained, budget) {
+		fallback := budgetDefaultOutput(output, budget)
+		fallback.category = category
+		return fallback
+	}
+	return truncatedBudgetedOutput(output, retained, category, "semantic_"+string(category)+"_budget")
+}
+
+func unchangedBudgetedOutput(output string, category outputCategory) budgetedOutput {
+	estimated := estimateOutputTokens(output)
+	return budgetedOutput{
+		text:                    output,
+		originalBytes:           len(output),
+		retainedBytes:           len(output),
+		estimatedOriginalTokens: estimated,
+		estimatedRetainedTokens: estimated,
+		category:                category,
+	}
+}
+
+func truncatedBudgetedOutput(original, retained string, category outputCategory, reason string) budgetedOutput {
+	return budgetedOutput{
+		text:                    retained,
+		originalBytes:           len(original),
+		retainedBytes:           len(retained),
+		estimatedOriginalTokens: estimateOutputTokens(original),
+		estimatedRetainedTokens: estimateOutputTokens(retained),
+		truncated:               true,
+		category:                category,
+		reason:                  reason,
+	}
+}
+
+func budgetFileLines(output string, budget outputBudget) string {
+	lines := outputLines(output)
+	priorities := make([]int, 0, len(lines))
+	// Keep the existing file/range header first, then alternate from the start
+	// and end so both requested-location boundaries survive.
+	if len(lines) > 0 {
+		priorities = append(priorities, 0)
+	}
+	for left, right := 1, len(lines)-1; left <= right; left, right = left+1, right-1 {
+		priorities = append(priorities, left)
+		if right != left {
+			priorities = append(priorities, right)
+		}
+	}
+	return retainPrioritizedLines(lines, priorities, budget)
+}
+
+func budgetSearchLines(output string, budget outputBudget) string {
+	lines := collapseConsecutiveDuplicateLines(outputLines(output))
+	priorities := make([]int, 0, len(lines))
+	for index, line := range lines {
+		lower := strings.ToLower(line)
+		// A match body naturally contains the search term (often literally
+		// "match"); treat only non-result lines as summaries so one busy file
+		// cannot consume the budget before cross-file representatives are chosen.
+		if searchResultFile(line) == "" && (strings.Contains(lower, "match") || strings.Contains(lower, "truncated") || strings.Contains(lower, "result")) {
+			priorities = append(priorities, index)
+		}
+	}
+	if len(lines) > 0 {
+		priorities = append(priorities, 0, len(lines)-1)
+	}
+	seenFiles := map[string]bool{}
+	for index, line := range lines {
+		if file := searchResultFile(line); file != "" && !seenFiles[file] {
+			seenFiles[file] = true
+			priorities = append(priorities, index)
+		}
+	}
+	priorities = append(priorities, sequence(len(lines))...)
+	return retainPrioritizedLines(lines, priorities, budget)
+}
+
+func budgetTestLines(output string, budget outputBudget) string {
+	lines := collapseConsecutiveDuplicateLines(outputLines(output))
+	priorities := make([]int, 0, len(lines))
+	for index, line := range lines {
+		if isTestFailureLine(line) {
+			for contextIndex := max(0, index-2); contextIndex <= min(len(lines)-1, index+3); contextIndex++ {
+				priorities = append(priorities, contextIndex)
+			}
+		}
+	}
+	// Final summaries and process status usually live at the tail.
+	for index := max(0, len(lines)-16); index < len(lines); index++ {
+		priorities = append(priorities, index)
+	}
+	for index := 0; index < min(8, len(lines)); index++ {
+		priorities = append(priorities, index)
+	}
+	priorities = append(priorities, sequence(len(lines))...)
+	return retainPrioritizedLines(lines, priorities, budget)
+}
+
+func budgetProcessLines(output string, budget outputBudget) string {
+	lines := collapseConsecutiveDuplicateLines(outputLines(output))
+	priorities := make([]int, 0, len(lines))
+	for index := 0; index < min(10, len(lines)); index++ {
+		priorities = append(priorities, index)
+	}
+	seenDiagnostic := map[string]bool{}
+	for index, line := range lines {
+		lower := strings.ToLower(line)
+		if containsAny(lower, "error", "warning", "warn:", "fatal", "panic", "failed", "denied") && !seenDiagnostic[line] {
+			seenDiagnostic[line] = true
+			priorities = append(priorities, index)
+		}
+	}
+	for index := max(0, len(lines)-16); index < len(lines); index++ {
+		priorities = append(priorities, index)
+	}
+	priorities = append(priorities, sequence(len(lines))...)
+	return retainPrioritizedLines(lines, priorities, budget)
+}
+
+func budgetWorkerLines(output string, budget outputBudget) string {
+	lines := collapseConsecutiveDuplicateLines(outputLines(output))
+	priorities := make([]int, 0, len(lines))
+	for index, line := range lines {
+		lower := strings.ToLower(line)
+		if containsAny(lower, "status", "error", "failed", "failure", "session_id", "changed", "files", "tools executed", "conclusion", "result") {
+			priorities = append(priorities, index)
+		}
+	}
+	// A specialist's final conclusion is conventionally at the end.
+	for index := max(0, len(lines)-20); index < len(lines); index++ {
+		priorities = append(priorities, index)
+	}
+	for index := 0; index < min(6, len(lines)); index++ {
+		priorities = append(priorities, index)
+	}
+	priorities = append(priorities, sequence(len(lines))...)
+	return retainPrioritizedLines(lines, priorities, budget)
+}
+
+type diffUnit struct {
+	order int
+	text  string
+	key   bool
+}
+
+func budgetDiffUnits(output string, budget outputBudget) string {
+	units := splitDiffUnits(output)
+	if len(units) == 0 {
+		return ""
+	}
+	priority := make([]int, 0, len(units))
+	for index, unit := range units {
+		if unit.key {
+			priority = append(priority, index)
+		}
+	}
+	priority = append(priority, sequence(len(units))...)
+	return retainPrioritizedUnits(units, priority, budget)
+}
+
+// splitDiffUnits keeps each hunk indivisible. File headers/stat text are key
+// units so broad file coverage is selected before secondary hunks.
+func splitDiffUnits(output string) []diffUnit {
+	lines := outputLines(output)
+	units := make([]diffUnit, 0)
+	var current []string
+	currentKey := false
+	flush := func() {
+		if len(current) == 0 {
+			return
+		}
+		units = append(units, diffUnit{order: len(units), text: strings.Join(current, "\n"), key: currentKey})
+		current = nil
+		currentKey = false
+	}
+	for _, line := range lines {
+		if strings.HasPrefix(line, "diff --git ") {
+			flush()
+			currentKey = true
+			current = append(current, line)
+			continue
+		}
+		if strings.HasPrefix(line, "@@ ") {
+			flush()
+			current = append(current, line)
+			continue
+		}
+		if len(current) == 0 {
+			currentKey = true // diff stat/summary or standalone file headers
+		}
+		current = append(current, line)
+	}
+	flush()
+	return units
+}
+
+func retainPrioritizedLines(lines []string, priorities []int, budget outputBudget) string {
+	units := make([]diffUnit, 0, len(lines))
+	for index, line := range lines {
+		units = append(units, diffUnit{order: index, text: line})
+	}
+	return retainPrioritizedUnits(units, priorities, budget)
+}
+
+func retainPrioritizedUnits(units []diffUnit, priorities []int, budget outputBudget) string {
+	selected := map[int]bool{}
+	best := ""
+	for _, index := range priorities {
+		if index < 0 || index >= len(units) || selected[index] {
+			continue
+		}
+		selected[index] = true
+		candidate := renderSelectedUnits(units, selected)
+		if !fitsOutputBudget(candidate, budget) {
+			delete(selected, index)
+			continue
+		}
+		best = candidate
+	}
+	return best
+}
+
+func renderSelectedUnits(units []diffUnit, selected map[int]bool) string {
+	indexes := make([]int, 0, len(selected))
+	for index := range selected {
+		indexes = append(indexes, index)
+	}
+	sort.Ints(indexes)
+	if len(indexes) == 0 {
+		return ""
+	}
+	parts := make([]string, 0, len(indexes)*2)
+	previous := -1
+	for _, index := range indexes {
+		if previous >= 0 && index != previous+1 {
+			omitted := index - previous - 1
+			parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", omitted))
+		} else if previous < 0 && index > 0 {
+			parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", index))
+		}
+		parts = append(parts, units[index].text)
+		previous = index
+	}
+	if previous < len(units)-1 {
+		parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", len(units)-previous-1))
+	}
+	return strings.Join(parts, "\n")
+}
+
+func outputLines(output string) []string {
+	return strings.Split(strings.TrimRight(output, "\r\n"), "\n")
+}
+
+func collapseConsecutiveDuplicateLines(lines []string) []string {
+	if len(lines) < 2 {
+		return lines
+	}
+	result := make([]string, 0, len(lines))
+	for index := 0; index < len(lines); {
+		end := index + 1
+		for end < len(lines) && lines[end] == lines[index] {
+			end++
+		}
+		result = append(result, lines[index])
+		if count := end - index; count > 1 {
+			result = append(result, fmt.Sprintf("[zero] previous line repeated %d more time(s)", count-1))
+		}
+		index = end
+	}
+	return result
+}
+
+func searchResultFile(line string) string {
+	parts := strings.SplitN(line, ":", 3)
+	if len(parts) < 3 {
+		return ""
+	}
+	if _, err := strconv.Atoi(parts[1]); err != nil {
+		return ""
+	}
+	return strings.TrimSpace(parts[0])
+}
+
+func isTestFailureLine(line string) bool {
+	lower := strings.ToLower(line)
+	return containsAny(lower, "--- fail:", "failed", "failure", "panic", "assert", "error", "fatal", "expected", "actual:")
+}
+
+func containsAny(value string, needles ...string) bool {
+	for _, needle := range needles {
+		if strings.Contains(value, needle) {
+			return true
+		}
+	}
+	return false
+}
+
+func sequence(length int) []int {
+	result := make([]int, length)
+	for index := range result {
+		result[index] = index
+	}
+	return result
+}
diff --git a/internal/tools/output_policies_test.go b/internal/tools/output_policies_test.go
new file mode 100644
index 000000000..1de407a66
--- /dev/null
+++ b/internal/tools/output_policies_test.go
@@ -0,0 +1,112 @@
+package tools
+
+import (
+	"fmt"
+	"strings"
+	"testing"
+	"unicode/utf8"
+)
+
+func semanticTestBudget() outputBudget {
+	return outputBudget{maxEstimatedTokens: 140, hardMaxBytes: 900}
+}
+
+func TestFileOutputPolicyKeepsCompleteHeadAndTailLines(t *testing.T) {
+	lines := []string{"File: huge.go (500 lines)", "1 | package main"}
+	for index := 2; index < 500; index++ {
+		lines = append(lines, fmt.Sprintf("%d | value := %d", index, index))
+	}
+	lines = append(lines, "500 | // END_MARK")
+	got := budgetSemanticOutput(strings.Join(lines, "\n"), outputCategoryFile, semanticTestBudget())
+	if !got.truncated || !strings.Contains(got.text, "File: huge.go") || !strings.Contains(got.text, "END_MARK") {
+		t.Fatalf("file policy lost boundaries: %#v", got)
+	}
+	if !utf8.ValidString(got.text) || strings.Contains(got.text, "value := 49\ufffd") {
+		t.Fatalf("file policy produced invalid or split text: %q", got.text)
+	}
+}
+
+func TestSearchOutputPolicyPreservesMultiFileCoverage(t *testing.T) {
+	var lines []string
+	for _, file := range []string{"a.go", "b.go", "c.go", "d.go"} {
+		for line := 1; line <= 30; line++ {
+			lines = append(lines, fmt.Sprintf("%s:%d: match value %d", file, line, line))
+		}
+	}
+	lines = append(lines, "120 matches found")
+	got := budgetSemanticOutput(strings.Join(lines, "\n"), outputCategorySearch, semanticTestBudget())
+	for _, want := range []string{"a.go:", "b.go:", "c.go:", "d.go:", "120 matches"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("search policy missing %q:\n%s", want, got.text)
+		}
+	}
+}
+
+func TestProcessOutputPolicyCollapsesRepetitiveLogsAndKeepsDiagnostics(t *testing.T) {
+	input := "starting server\n" + strings.Repeat("polling...\n", 300) + "WARNING: queue slow\nERROR: request failed\nshutdown complete"
+	got := budgetSemanticOutput(input, outputCategoryProcess, semanticTestBudget())
+	for _, want := range []string{"starting server", "repeated", "WARNING", "ERROR", "shutdown complete"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("process policy missing %q:\n%s", want, got.text)
+		}
+	}
+	if strings.Count(got.text, "polling...") > 1 {
+		t.Fatalf("repetitive line was not collapsed:\n%s", got.text)
+	}
+}
+
+func TestTestOutputPolicyKeepsFailureAndFinalSummary(t *testing.T) {
+	input := "=== RUN TestSuite\n" + strings.Repeat("ok progress\n", 300) +
+		"--- FAIL: TestImportant (0.01s)\n    thing_test.go:42: expected 7, got 9\nFAIL\nexit status 1"
+	got := budgetSemanticOutput(input, outputCategoryTest, semanticTestBudget())
+	for _, want := range []string{"TestImportant", "expected 7", "FAIL", "exit status 1"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("test policy missing %q:\n%s", want, got.text)
+		}
+	}
+}
+
+func TestDiffOutputPolicyKeepsFilesAndCompleteHunks(t *testing.T) {
+	var diff strings.Builder
+	for file := 1; file <= 4; file++ {
+		fmt.Fprintf(&diff, "diff --git a/f%d.go b/f%d.go\n--- a/f%d.go\n+++ b/f%d.go\n", file, file, file, file)
+		for hunk := 1; hunk <= 8; hunk++ {
+			fmt.Fprintf(&diff, "@@ -%d,2 +%d,2 @@\n-old%d_%d\n+new%d_%d\n", hunk, hunk, file, hunk, file, hunk)
+		}
+	}
+	got := budgetSemanticOutput(diff.String(), outputCategoryDiff, outputBudget{maxEstimatedTokens: 220, hardMaxBytes: 1400})
+	for file := 1; file <= 4; file++ {
+		if !strings.Contains(got.text, fmt.Sprintf("diff --git a/f%d.go", file)) {
+			t.Fatalf("diff policy lost file %d header:\n%s", file, got.text)
+		}
+	}
+	for _, line := range strings.Split(got.text, "\n") {
+		if strings.HasPrefix(line, "@@ ") {
+			// Each retained hunk is an indivisible three-line unit.
+			if !strings.Contains(got.text, line+"\n-old") {
+				t.Fatalf("hunk header was sliced from its body: %q", line)
+			}
+		}
+	}
+}
+
+func TestWorkerOutputPolicyKeepsStatusErrorsAndConclusion(t *testing.T) {
+	input := "session_id: child_1\nstatus: error\n" + strings.Repeat("worker progress\n", 200) +
+		"tools executed: grep, read_file\nchanged files: a.go, b.go\nerror: verification failed\nConclusion: fix the nil check before merging."
+	got := budgetSemanticOutput(input, outputCategoryWorker, semanticTestBudget())
+	for _, want := range []string{"session_id", "status: error", "tools executed", "changed files", "verification failed", "Conclusion"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("worker policy missing %q:\n%s", want, got.text)
+		}
+	}
+}
+
+func TestSemanticPoliciesAreDeterministic(t *testing.T) {
+	input := "start\n" + strings.Repeat("tick\n", 500) + "ERROR: boom\nend"
+	want := budgetSemanticOutput(input, outputCategoryProcess, semanticTestBudget())
+	for iteration := 0; iteration < 20; iteration++ {
+		if got := budgetSemanticOutput(input, outputCategoryProcess, semanticTestBudget()); got != want {
+			t.Fatalf("iteration %d differs:\n got %#v\nwant %#v", iteration, got, want)
+		}
+	}
+}

From 7bc135249e42a68341aba64e933d1459ef3ce888 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:37:45 +0530
Subject: [PATCH 03/15] perf(output): budget results after redaction

---
 internal/tools/output_boundary.go      | 102 +++++++++++++++++++++++++
 internal/tools/output_boundary_test.go |  85 +++++++++++++++++++++
 internal/tools/output_ceiling_test.go  |   4 +-
 internal/tools/registry.go             |   5 +-
 4 files changed, 193 insertions(+), 3 deletions(-)
 create mode 100644 internal/tools/output_boundary.go
 create mode 100644 internal/tools/output_boundary_test.go

diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
new file mode 100644
index 000000000..5d17d07a4
--- /dev/null
+++ b/internal/tools/output_boundary.go
@@ -0,0 +1,102 @@
+package tools
+
+import (
+	"fmt"
+	"strconv"
+	"strings"
+)
+
+const (
+	outputBudgetCategoryMeta                = "output_budget_category"
+	outputBudgetOriginalBytesMeta           = "output_budget_original_bytes"
+	outputBudgetRetainedBytesMeta           = "output_budget_retained_bytes"
+	outputBudgetEstimatedOriginalTokensMeta = "output_budget_estimated_original_tokens"
+	outputBudgetEstimatedRetainedTokensMeta = "output_budget_estimated_retained_tokens"
+	outputBudgetReasonMeta                  = "output_budget_reason"
+	outputBudgetSpillCreatedMeta            = "output_budget_spill_created"
+)
+
+// applyRegistryOutputBudget is the common post-redaction semantic budgeting
+// boundary for tools that do not already own a deliberate output budget.
+func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any, result Result) Result {
+	ceilingTokens := resolveOutputCeilingTokens()
+	if ceilingTokens <= 0 {
+		return result // preserve ZERO_TOOL_OUTPUT_CEILING_TOKENS=0 semantics
+	}
+
+	category := outputCategoryDefault
+	if provider, ok := tool.(outputPolicyProvider); ok {
+		category = provider.outputCategory(args)
+	}
+	budget := outputBudget{
+		maxEstimatedTokens: ceilingTokens,
+		hardMaxBytes:       ceilingTokens * 4,
+	}
+	budgeted := budgetSemanticOutput(result.Output, category, budget)
+	if budgeted.truncated {
+		budgeted = attachExistingSpill(toolName, result.Output, budget, budgeted)
+	}
+	result.Output = budgeted.text
+	result.Truncated = result.Truncated || budgeted.truncated
+	result.Meta = addOutputBudgetMetadata(result.Meta, budgeted)
+	return result
+}
+
+// attachExistingSpill reuses Zero's hardened per-user spill directory. output
+// is the already-redacted text received by this layer; it may itself be a
+// capture-bounded view produced by a subprocess tool.
+func attachExistingSpill(toolName, output string, budget outputBudget, current budgetedOutput) budgetedOutput {
+	path := spillTruncatedOutput(toolName, output)
+	if path == "" {
+		return current
+	}
+	notice := "[zero] full output received by budgeting layer saved to " + path + " (grep or read_file it instead of re-running)"
+	reduced := outputBudget{
+		maxEstimatedTokens: max(1, budget.maxEstimatedTokens-estimateOutputTokens("\n"+notice)),
+		hardMaxBytes:       max(1, budget.hardMaxBytes-len("\n"+notice)),
+	}
+	base := budgetSemanticOutput(output, current.category, reduced)
+	text := strings.TrimRight(base.text, "\n") + "\n" + notice
+	if !fitsOutputBudget(text, budget) {
+		// An unusually long temp path or tiny configured ceiling can leave no
+		// room for the full notice. Keep the safe bounded result; the spill still
+		// exists but is intentionally not advertised with a chopped reference.
+		return current
+	}
+	base.text = text
+	base.retainedBytes = len(text)
+	base.estimatedRetainedTokens = estimateOutputTokens(text)
+	base.spillPath = path
+	return base
+}
+
+func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[string]string {
+	if meta == nil {
+		meta = map[string]string{}
+	}
+	meta[outputBudgetCategoryMeta] = string(output.category)
+	meta[outputBudgetOriginalBytesMeta] = strconv.Itoa(output.originalBytes)
+	meta[outputBudgetRetainedBytesMeta] = strconv.Itoa(output.retainedBytes)
+	meta[outputBudgetEstimatedOriginalTokensMeta] = strconv.Itoa(output.estimatedOriginalTokens)
+	meta[outputBudgetEstimatedRetainedTokensMeta] = strconv.Itoa(output.estimatedRetainedTokens)
+	meta[outputBudgetSpillCreatedMeta] = strconv.FormatBool(output.spillPath != "")
+	if output.reason != "" {
+		meta[outputBudgetReasonMeta] = output.reason
+	}
+	if output.truncated {
+		// Preserve the existing metadata vocabulary used by callers and tests.
+		meta["raw_bytes"] = strconv.Itoa(output.originalBytes)
+		meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
+		meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
+		meta["truncated"] = "true"
+		meta["truncation_reason"] = output.reason
+	}
+	if output.spillPath != "" {
+		meta["spill_path"] = output.spillPath
+	}
+	return meta
+}
+
+func outputBudgetDebugString(output budgetedOutput) string {
+	return fmt.Sprintf("category=%s original=%d retained=%d truncated=%t reason=%s", output.category, output.originalBytes, output.retainedBytes, output.truncated, output.reason)
+}
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
new file mode 100644
index 000000000..4b239faac
--- /dev/null
+++ b/internal/tools/output_boundary_test.go
@@ -0,0 +1,85 @@
+package tools
+
+import (
+	"context"
+	"os"
+	"path/filepath"
+	"strconv"
+	"strings"
+	"testing"
+	"unicode/utf8"
+)
+
+func TestRegistryBudgetRunsAfterRedactionAndSpillsRedactedOutput(t *testing.T) {
+	setTestTempDir(t)
+	secret := "ghp_" + strings.Repeat("a", 36)
+	big := "HEAD\n" + secret + "\n" + strings.Repeat("🙂 noisy output\n", 20_000) + "TAIL"
+	registry := NewRegistry()
+	registry.Register(newCeilingFakeTool("redacted_big", big))
+
+	result := registry.Run(context.Background(), "redacted_big", map[string]any{})
+	if !result.Truncated || result.Meta[outputBudgetSpillCreatedMeta] != "true" {
+		t.Fatalf("unexpected budget result: truncated=%t meta=%#v", result.Truncated, result.Meta)
+	}
+	if strings.Contains(result.Output, secret) || !utf8.ValidString(result.Output) {
+		t.Fatalf("exposed output leaked secret or invalid UTF-8: %q", result.Output)
+	}
+	spillPath := result.Meta["spill_path"]
+	content, err := os.ReadFile(spillPath)
+	if err != nil {
+		t.Fatalf("read spill: %v", err)
+	}
+	if strings.Contains(string(content), secret) {
+		t.Fatal("spill contains unredacted secret")
+	}
+	if !strings.Contains(string(content), "HEAD") || !strings.Contains(string(content), "TAIL") {
+		t.Fatal("spill does not contain the complete redacted output received by the budget layer")
+	}
+}
+
+func TestRegistryBudgetSpillFailureFallsBackToBoundedOutput(t *testing.T) {
+	temp := t.TempDir()
+	blockedTemp := filepath.Join(temp, "not-a-directory")
+	if err := os.WriteFile(blockedTemp, []byte("x"), 0o600); err != nil {
+		t.Fatal(err)
+	}
+	t.Setenv("TMPDIR", blockedTemp)
+	t.Setenv(outputCeilingEnv, "100")
+
+	registry := NewRegistry()
+	registry.Register(newCeilingFakeTool("spill_failure", strings.Repeat("large output\n", 1000)))
+	result := registry.Run(context.Background(), "spill_failure", map[string]any{})
+	if !result.Truncated || len(result.Output) > 400 {
+		t.Fatalf("fallback is not bounded: truncated=%t bytes=%d", result.Truncated, len(result.Output))
+	}
+	if result.Meta[outputBudgetSpillCreatedMeta] != "false" || result.Meta["spill_path"] != "" {
+		t.Fatalf("spill failure incorrectly advertised: %#v", result.Meta)
+	}
+}
+
+func TestRegistryMissingPolicyUsesDefaultAndExactHardCeiling(t *testing.T) {
+	setTestTempDir(t)
+	t.Setenv(outputCeilingEnv, "80")
+	input := "HEAD\n" + strings.Repeat("x", 3000) + "\nTAIL"
+	registry := NewRegistry()
+	registry.Register(newCeilingFakeTool("no_policy", input))
+	result := registry.Run(context.Background(), "no_policy", map[string]any{})
+	if got := result.Meta[outputBudgetCategoryMeta]; got != string(outputCategoryDefault) {
+		t.Fatalf("category = %q, want default", got)
+	}
+	if len(result.Output) > 80*4 {
+		t.Fatalf("output = %d bytes, hard ceiling %d", len(result.Output), 80*4)
+	}
+	if result.Meta[outputBudgetOriginalBytesMeta] != strconv.Itoa(len(input)) {
+		t.Fatalf("original size metadata = %q", result.Meta[outputBudgetOriginalBytesMeta])
+	}
+}
+
+func TestRegistrySmallOutputRemainsByteIdentical(t *testing.T) {
+	registry := NewRegistry()
+	registry.Register(newCeilingFakeTool("small_identity", "hello\nworld\n"))
+	result := registry.Run(context.Background(), "small_identity", map[string]any{})
+	if result.Output != "hello\nworld\n" || result.Truncated {
+		t.Fatalf("small output changed: %#v", result)
+	}
+}
diff --git a/internal/tools/output_ceiling_test.go b/internal/tools/output_ceiling_test.go
index bf65d5712..0639a23d2 100644
--- a/internal/tools/output_ceiling_test.go
+++ b/internal/tools/output_ceiling_test.go
@@ -55,10 +55,10 @@ func TestOutputCeilingCapsUnbudgetedTool(t *testing.T) {
 	if result.Meta["raw_bytes"] != strconv.Itoa(len(big)) {
 		t.Fatalf("raw_bytes = %s, want %d", result.Meta["raw_bytes"], len(big))
 	}
-	if !strings.Contains(result.Output, "full output saved to ") {
+	if !strings.Contains(result.Output, "full output received by budgeting layer saved to ") {
 		t.Fatalf("ceiling truncation must include a spill hint: %q", result.Output[:200])
 	}
-	start := strings.Index(result.Output, "full output saved to ") + len("full output saved to ")
+	start := strings.Index(result.Output, "full output received by budgeting layer saved to ") + len("full output received by budgeting layer saved to ")
 	end := strings.Index(result.Output[start:], " (grep")
 	content, err := os.ReadFile(result.Output[start : start+end])
 	if err != nil {
diff --git a/internal/tools/registry.go b/internal/tools/registry.go
index c41c40d04..cebd8d8c8 100644
--- a/internal/tools/registry.go
+++ b/internal/tools/registry.go
@@ -127,14 +127,17 @@ func (registry *Registry) RunWithOptions(ctx context.Context, name string, args
 	// ceiling runs after the scrub so the transcript and the spill file agree on
 	// what was hidden.
 	ceilingExempt := false
+	var tool Tool
+	var ok bool
 	defer func() {
 		result = scrubResultSecrets(result)
 		if !ceilingExempt {
+			result = applyRegistryOutputBudget(tool, name, args, result)
 			result = enforceOutputCeiling(name, result)
 		}
 	}()
 
-	tool, ok := registry.Get(name)
+	tool, ok = registry.Get(name)
 	if !ok {
 		return errorResult(`Error: Unknown tool "` + name + `".`)
 	}

From 4377aa96933186a5de27498ae737585234d42588 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:39:45 +0530
Subject: [PATCH 04/15] perf(output): propagate tool truncation metadata

---
 internal/agent/loop.go                        |  3 ++
 .../agent/output_budget_propagation_test.go   | 47 +++++++++++++++++++
 internal/agent/types.go                       | 11 +++--
 internal/cli/exec.go                          |  3 ++
 internal/cli/exec_writer.go                   |  6 ++-
 internal/cli/exec_writer_test.go              | 36 ++++++++++++++
 6 files changed, 101 insertions(+), 5 deletions(-)
 create mode 100644 internal/agent/output_budget_propagation_test.go

diff --git a/internal/agent/loop.go b/internal/agent/loop.go
index 44701588b..8bbc8c67d 100644
--- a/internal/agent/loop.go
+++ b/internal/agent/loop.go
@@ -1305,6 +1305,7 @@ func executeToolCall(ctx context.Context, registry *tools.Registry, call ToolCal
 		Name:         call.Name,
 		Status:       result.Status,
 		Output:       result.Output,
+		Truncated:    result.Truncated,
 		Meta:         result.Meta,
 		Redacted:     result.Redacted,
 		ChangedFiles: result.ChangedFiles,
@@ -1615,6 +1616,7 @@ func toolResultFromPrePermissionReject(call ToolCall, result tools.Result) ToolR
 		Name:           call.Name,
 		Status:         result.Status,
 		Output:         output,
+		Truncated:      result.Truncated,
 		Meta:           meta,
 		Redacted:       result.Redacted || outputRedacted || summaryRedacted || metaRedacted,
 		ChangedFiles:   result.ChangedFiles,
@@ -1884,6 +1886,7 @@ func askUserFallbackResult(ctx context.Context, registry *tools.Registry, call T
 			Name:         call.Name,
 			Status:       result.Status,
 			Output:       result.Output,
+			Truncated:    result.Truncated,
 			Meta:         result.Meta,
 			Redacted:     result.Redacted,
 			ChangedFiles: result.ChangedFiles,
diff --git a/internal/agent/output_budget_propagation_test.go b/internal/agent/output_budget_propagation_test.go
new file mode 100644
index 000000000..e48b60280
--- /dev/null
+++ b/internal/agent/output_budget_propagation_test.go
@@ -0,0 +1,47 @@
+package agent
+
+import (
+	"context"
+	"strings"
+	"testing"
+
+	"github.com/Gitlawb/zero/internal/tools"
+)
+
+type propagationOutputTool struct {
+	output string
+}
+
+func (tool propagationOutputTool) Name() string        { return "propagation_output" }
+func (tool propagationOutputTool) Description() string { return "returns output for propagation tests" }
+func (tool propagationOutputTool) Parameters() tools.Schema {
+	return tools.Schema{Type: "object", AdditionalProperties: false}
+}
+func (tool propagationOutputTool) Safety() tools.Safety {
+	return tools.Safety{SideEffect: tools.SideEffectRead, Permission: tools.PermissionAllow, Reason: "test read"}
+}
+func (tool propagationOutputTool) Run(context.Context, map[string]any) tools.Result {
+	return tools.Result{Status: tools.StatusOK, Output: tool.output}
+}
+
+func TestExecuteToolCallPropagatesOutputTruncation(t *testing.T) {
+	t.Setenv("TMPDIR", t.TempDir())
+	t.Setenv("ZERO_TOOL_OUTPUT_CEILING_TOKENS", "80")
+	registry := tools.NewRegistry()
+	registry.Register(propagationOutputTool{output: strings.Repeat("large output\n", 1000)})
+
+	result, abortErr := executeToolCall(context.Background(), registry, ToolCall{
+		ID:        "call-budget",
+		Name:      "propagation_output",
+		Arguments: `{}`,
+	}, PermissionModeAuto, Options{Cwd: t.TempDir()})
+	if abortErr != nil {
+		t.Fatalf("executeToolCall abort error: %v", abortErr)
+	}
+	if !result.Truncated {
+		t.Fatalf("agent ToolResult lost tools.Result.Truncated: %#v", result)
+	}
+	if result.Meta["spill_path"] == "" {
+		t.Fatalf("agent ToolResult lost spill metadata: %#v", result.Meta)
+	}
+}
diff --git a/internal/agent/types.go b/internal/agent/types.go
index 465d4a0fd..21e06e07a 100644
--- a/internal/agent/types.go
+++ b/internal/agent/types.go
@@ -61,10 +61,13 @@ const (
 )
 
 type ToolResult struct {
-	ToolCallID   string
-	Name         string
-	Status       tools.Status
-	Output       string
+	ToolCallID string
+	Name       string
+	Status     tools.Status
+	Output     string
+	// Truncated reports that the tool's model-visible output omitted content.
+	// The full result may be recoverable through Meta["spill_path"].
+	Truncated    bool
 	Meta         map[string]string
 	Redacted     bool
 	ChangedFiles []string
diff --git a/internal/cli/exec.go b/internal/cli/exec.go
index b8b6ef7d9..b79861144 100644
--- a/internal/cli/exec.go
+++ b/internal/cli/exec.go
@@ -636,6 +636,9 @@ func runExec(args []string, stdout io.Writer, stderr io.Writer, deps appDeps) in
 			if len(result.Meta) > 0 {
 				payload["meta"] = result.Meta
 			}
+			if result.Truncated {
+				payload["truncated"] = true
+			}
 			if result.Redacted {
 				payload["redacted"] = true
 			}
diff --git a/internal/cli/exec_writer.go b/internal/cli/exec_writer.go
index e98d526a6..824b9c00f 100644
--- a/internal/cli/exec_writer.go
+++ b/internal/cli/exec_writer.go
@@ -153,6 +153,9 @@ func (writer *execEventWriter) toolResult(result agent.ToolResult) {
 		if len(result.Meta) > 0 {
 			payload["meta"] = result.Meta
 		}
+		if result.Truncated {
+			payload["truncated"] = true
+		}
 		if result.Redacted {
 			payload["redacted"] = true
 		}
@@ -166,7 +169,8 @@ func (writer *execEventWriter) toolResult(result agent.ToolResult) {
 		return
 	}
 	if writer.format == execOutputStreamJSON {
-		output, truncated := truncateForStreamJSONOutput(result.Output)
+		output, surfaceTruncated := truncateForStreamJSONOutput(result.Output)
+		truncated := result.Truncated || surfaceTruncated
 		event := streamjson.Event{
 			Type:         streamjson.EventToolResult,
 			RunID:        writer.runID,
diff --git a/internal/cli/exec_writer_test.go b/internal/cli/exec_writer_test.go
index 3c07f2b32..470e443b3 100644
--- a/internal/cli/exec_writer_test.go
+++ b/internal/cli/exec_writer_test.go
@@ -1,8 +1,12 @@
 package cli
 
 import (
+	"bytes"
+	"encoding/json"
+	"strings"
 	"testing"
 
+	"github.com/Gitlawb/zero/internal/agent"
 	"github.com/Gitlawb/zero/internal/tools"
 )
 
@@ -16,3 +20,35 @@ func TestStreamJSONSideEffectReportsNoneForControlTool(t *testing.T) {
 		t.Fatalf("streamJSONSideEffect(escalate_model) = %q, want none", got)
 	}
 }
+
+func TestExecWriterPropagatesToolResultTruncation(t *testing.T) {
+	for _, format := range []execOutputFormat{execOutputJSON, execOutputStreamJSON} {
+		t.Run(string(format), func(t *testing.T) {
+			var stdout, stderr bytes.Buffer
+			writer := execEventWriter{
+				stdout:       &stdout,
+				stderr:       &stderr,
+				format:       format,
+				runID:        "run_budget",
+				streamedText: &strings.Builder{},
+			}
+			writer.toolResult(agent.ToolResult{
+				ToolCallID: "call_budget",
+				Name:       "read_file",
+				Status:     tools.StatusOK,
+				Output:     "bounded output",
+				Truncated:  true,
+			})
+			if writer.err != nil {
+				t.Fatalf("toolResult: %v", writer.err)
+			}
+			var payload map[string]any
+			if err := json.Unmarshal(bytes.TrimSpace(stdout.Bytes()), &payload); err != nil {
+				t.Fatalf("decode output %q: %v", stdout.String(), err)
+			}
+			if payload["truncated"] != true {
+				t.Fatalf("truncated = %#v, want true; payload=%#v", payload["truncated"], payload)
+			}
+		})
+	}
+}

From ebc5b0fac7fe8799c932a0f3bf15126bfecd7953 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:41:48 +0530
Subject: [PATCH 05/15] perf(output): trace semantic budget decisions

---
 internal/agent/loop.go                        | 24 ++++++++++++
 .../agent/output_budget_propagation_test.go   | 29 ++++++++++++++
 internal/trace/emit.go                        | 28 ++++++++++++++
 internal/trace/output_budget_test.go          | 38 +++++++++++++++++++
 internal/trace/parse.go                       | 22 ++++++++++-
 internal/trace/recorder.go                    | 16 ++++++++
 internal/trace/trace.go                       | 38 +++++++++++++------
 7 files changed, 183 insertions(+), 12 deletions(-)
 create mode 100644 internal/trace/output_budget_test.go

diff --git a/internal/agent/loop.go b/internal/agent/loop.go
index 8bbc8c67d..7e860484d 100644
--- a/internal/agent/loop.go
+++ b/internal/agent/loop.go
@@ -7,6 +7,7 @@ import (
 	"fmt"
 	"io"
 	"sort"
+	"strconv"
 	"strings"
 	"sync"
 
@@ -656,6 +657,7 @@ func Run(ctx context.Context, prompt string, provider Provider, options Options)
 				toolSpan.End()
 			}
 			options.Trace.Counter(trace.CounterToolCalls, 1)
+			recordOutputBudgetTrace(options.Trace, toolResult)
 			if options.OnToolResult != nil {
 				options.OnToolResult(toolResult)
 			}
@@ -841,6 +843,28 @@ func Run(ctx context.Context, prompt string, provider Provider, options Options)
 	return result, nil
 }
 
+func recordOutputBudgetTrace(recorder *trace.Recorder, result ToolResult) {
+	if recorder == nil || result.Meta["output_budget_category"] == "" {
+		return
+	}
+	parseInt := func(key string) int {
+		value, _ := strconv.Atoi(result.Meta[key])
+		return value
+	}
+	spillCreated, _ := strconv.ParseBool(result.Meta["output_budget_spill_created"])
+	recorder.EmitOutputBudget(trace.OutputBudgetEvent{
+		Tool:                    result.Name,
+		Category:                result.Meta["output_budget_category"],
+		OriginalBytes:           parseInt("output_budget_original_bytes"),
+		RetainedBytes:           parseInt("output_budget_retained_bytes"),
+		EstimatedOriginalTokens: parseInt("output_budget_estimated_original_tokens"),
+		EstimatedRetainedTokens: parseInt("output_budget_estimated_retained_tokens"),
+		Truncated:               result.Truncated,
+		Reason:                  result.Meta["output_budget_reason"],
+		SpillCreated:            spillCreated,
+	})
+}
+
 func finalAnswerAfterMaxTurns(ctx context.Context, provider Provider, messages []zeroruntime.Message, toolDefs []zeroruntime.ToolDefinition, options Options) (string, []zeroruntime.Message, string) {
 	finalMessages := copyMessages(messages)
 	finalMessages = append(finalMessages, zeroruntime.Message{
diff --git a/internal/agent/output_budget_propagation_test.go b/internal/agent/output_budget_propagation_test.go
index e48b60280..93867b511 100644
--- a/internal/agent/output_budget_propagation_test.go
+++ b/internal/agent/output_budget_propagation_test.go
@@ -6,6 +6,7 @@ import (
 	"testing"
 
 	"github.com/Gitlawb/zero/internal/tools"
+	"github.com/Gitlawb/zero/internal/trace"
 )
 
 type propagationOutputTool struct {
@@ -45,3 +46,31 @@ func TestExecuteToolCallPropagatesOutputTruncation(t *testing.T) {
 		t.Fatalf("agent ToolResult lost spill metadata: %#v", result.Meta)
 	}
 }
+
+func TestRecordOutputBudgetTraceUsesOnlyCompactMetadata(t *testing.T) {
+	recorder := trace.NewRecorder("session", "run", "")
+	recorder.Start()
+	recordOutputBudgetTrace(recorder, ToolResult{
+		Name:      "grep",
+		Truncated: true,
+		Output:    "SECRET OUTPUT MUST NOT ENTER TRACE",
+		Meta: map[string]string{
+			"output_budget_category":                  "search",
+			"output_budget_original_bytes":            "1000",
+			"output_budget_retained_bytes":            "100",
+			"output_budget_estimated_original_tokens": "250",
+			"output_budget_estimated_retained_tokens": "25",
+			"output_budget_reason":                    "semantic_search_budget",
+			"output_budget_spill_created":             "true",
+			"spill_path":                              "/secret/path/not-for-trace",
+		},
+	})
+	events := recorder.Finish().OutputBudgets
+	if len(events) != 1 {
+		t.Fatalf("events = %#v", events)
+	}
+	event := events[0]
+	if event.Tool != "grep" || event.Category != "search" || event.OriginalBytes != 1000 || event.RetainedBytes != 100 || !event.SpillCreated {
+		t.Fatalf("unexpected trace event: %#v", event)
+	}
+}
diff --git a/internal/trace/emit.go b/internal/trace/emit.go
index 2eae76c79..07f751e3b 100644
--- a/internal/trace/emit.go
+++ b/internal/trace/emit.go
@@ -117,6 +117,25 @@ func WriteNDJSON(w io.Writer, t *TurnTrace) error {
 			return err
 		}
 	}
+	// Output budget events stay in tool-result emission order. Sorting them by
+	// tool/category would destroy correlation with concurrent calls whose results
+	// are deliberately consumed in original call order.
+	for _, event := range t.OutputBudgets {
+		if err := enc.Encode(map[string]any{
+			"type":                      "output_budget",
+			"tool":                      event.Tool,
+			"category":                  event.Category,
+			"original_bytes":            event.OriginalBytes,
+			"retained_bytes":            event.RetainedBytes,
+			"estimated_original_tokens": event.EstimatedOriginalTokens,
+			"estimated_retained_tokens": event.EstimatedRetainedTokens,
+			"truncated":                 event.Truncated,
+			"reason":                    event.Reason,
+			"spill_created":             event.SpillCreated,
+		}); err != nil {
+			return err
+		}
+	}
 	return nil
 }
 
@@ -177,6 +196,15 @@ func WriteText(w io.Writer, t *TurnTrace) error {
 	for _, c := range counters {
 		write("  %-22s %d\n", c.Name, c.Value)
 	}
+	if len(t.OutputBudgets) > 0 {
+		write("output budgets:\n")
+		for _, event := range t.OutputBudgets {
+			write("  tool=%s category=%s bytes=%d/%d tokens=%d/%d truncated=%t reason=%s spill=%t\n",
+				event.Tool, event.Category, event.RetainedBytes, event.OriginalBytes,
+				event.EstimatedRetainedTokens, event.EstimatedOriginalTokens,
+				event.Truncated, event.Reason, event.SpillCreated)
+		}
+	}
 	return firstErr
 }
 
diff --git a/internal/trace/output_budget_test.go b/internal/trace/output_budget_test.go
new file mode 100644
index 000000000..72f26acbd
--- /dev/null
+++ b/internal/trace/output_budget_test.go
@@ -0,0 +1,38 @@
+package trace
+
+import (
+	"bytes"
+	"strings"
+	"testing"
+)
+
+func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
+	recorder := NewRecorder("session", "run", "")
+	recorder.Start()
+	recorder.EmitOutputBudget(OutputBudgetEvent{
+		Tool:                    "grep",
+		Category:                "search",
+		OriginalBytes:           10000,
+		RetainedBytes:           1000,
+		EstimatedOriginalTokens: 2500,
+		EstimatedRetainedTokens: 250,
+		Truncated:               true,
+		Reason:                  "semantic_search_budget",
+		SpillCreated:            true,
+	})
+
+	var encoded bytes.Buffer
+	if err := WriteNDJSON(&encoded, recorder.Finish()); err != nil {
+		t.Fatalf("WriteNDJSON: %v", err)
+	}
+	if strings.Contains(encoded.String(), "secret output body") {
+		t.Fatal("trace unexpectedly contains output text")
+	}
+	parsed, err := ReadNDJSON(strings.NewReader(encoded.String()))
+	if err != nil {
+		t.Fatalf("ReadNDJSON: %v", err)
+	}
+	if len(parsed.OutputBudgets) != 1 || parsed.OutputBudgets[0].Tool != "grep" || !parsed.OutputBudgets[0].Truncated {
+		t.Fatalf("unexpected round trip: %#v", parsed.OutputBudgets)
+	}
+}
diff --git a/internal/trace/parse.go b/internal/trace/parse.go
index b02aa4c5c..0f188bee0 100644
--- a/internal/trace/parse.go
+++ b/internal/trace/parse.go
@@ -116,6 +116,21 @@ func ReadNDJSON(r io.Reader) (*TurnTrace, error) {
 				SchemaHash:             stringField(obj, "schema"),
 				CompletePrefixHash:     stringField(obj, "complete_prefix"),
 			})
+		case "output_budget":
+			if !sawTraceHeader {
+				return nil, errors.New("parse trace: not a valid NDJSON trace (no type:trace header)")
+			}
+			t.OutputBudgets = append(t.OutputBudgets, OutputBudgetEvent{
+				Tool:                    stringField(obj, "tool"),
+				Category:                stringField(obj, "category"),
+				OriginalBytes:           int(parseInt64(obj["original_bytes"])),
+				RetainedBytes:           int(parseInt64(obj["retained_bytes"])),
+				EstimatedOriginalTokens: int(parseInt64(obj["estimated_original_tokens"])),
+				EstimatedRetainedTokens: int(parseInt64(obj["estimated_retained_tokens"])),
+				Truncated:               boolField(obj, "truncated"),
+				Reason:                  stringField(obj, "reason"),
+				SpillCreated:            boolField(obj, "spill_created"),
+			})
 		default:
 			// Unknown event type: tolerate (forward-compat) but only after a
 			// header has been seen.
@@ -136,12 +151,17 @@ func ReadNDJSON(r io.Reader) (*TurnTrace, error) {
 	if !sawTraceHeader {
 		return nil, errors.New("parse trace: non-empty input had no type:trace header")
 	}
-	if len(t.Spans) == 0 && len(t.Counters) == 0 && len(t.PrefixHashes) == 0 {
+	if len(t.Spans) == 0 && len(t.Counters) == 0 && len(t.PrefixHashes) == 0 && len(t.OutputBudgets) == 0 {
 		return nil, errors.New("parse trace: header present but no spans, counters, or prefix hashes recovered (corrupt or truncated)")
 	}
 	return t, nil
 }
 
+func boolField(obj map[string]any, key string) bool {
+	value, _ := obj[key].(bool)
+	return value
+}
+
 // stringField returns obj[key] as a string, or "" if the key is missing or
 // the value is not a string. JSON-marshaled trace events always emit
 // string fields as JSON strings, so the type assertion is the right
diff --git a/internal/trace/recorder.go b/internal/trace/recorder.go
index b4cf43ff5..0f486d530 100644
--- a/internal/trace/recorder.go
+++ b/internal/trace/recorder.go
@@ -188,6 +188,21 @@ func (r *Recorder) EmitPrefixHash(p PrefixHash) {
 	r.tr.PrefixHashes = append(r.tr.PrefixHashes, p)
 }
 
+// EmitOutputBudget records one content-free output budgeting decision. Calls
+// are retained in transcript emission order, including when the underlying
+// tools executed concurrently.
+func (r *Recorder) EmitOutputBudget(event OutputBudgetEvent) {
+	if r == nil {
+		return
+	}
+	r.mu.Lock()
+	defer r.mu.Unlock()
+	if r.finished {
+		return
+	}
+	r.tr.OutputBudgets = append(r.tr.OutputBudgets, event)
+}
+
 // Finish stamps CompletedAt, derives each span's parent (by interval
 // containment) and exclusive time, and returns a snapshot of the trace. Calling
 // Finish more than once returns the same snapshot.
@@ -207,6 +222,7 @@ func (r *Recorder) Finish() *TurnTrace {
 	snap.Spans = append([]Span(nil), r.tr.Spans...)
 	snap.Counters = append([]Counter(nil), r.tr.Counters...)
 	snap.PrefixHashes = append([]PrefixHash(nil), r.tr.PrefixHashes...)
+	snap.OutputBudgets = append([]OutputBudgetEvent(nil), r.tr.OutputBudgets...)
 	return &snap
 }
 
diff --git a/internal/trace/trace.go b/internal/trace/trace.go
index c7443661f..f7a541233 100644
--- a/internal/trace/trace.go
+++ b/internal/trace/trace.go
@@ -79,20 +79,36 @@ type Counter struct {
 	Value int64  `json:"value"`
 }
 
+// OutputBudgetEvent is compact, content-free metadata for one tool result's
+// output budgeting decision. It deliberately carries no output text, paths, or
+// arguments so tracing cannot become a secret-bearing side channel.
+type OutputBudgetEvent struct {
+	Tool                    string `json:"tool"`
+	Category                string `json:"category"`
+	OriginalBytes           int    `json:"original_bytes"`
+	RetainedBytes           int    `json:"retained_bytes"`
+	EstimatedOriginalTokens int    `json:"estimated_original_tokens"`
+	EstimatedRetainedTokens int    `json:"estimated_retained_tokens"`
+	Truncated               bool   `json:"truncated"`
+	Reason                  string `json:"reason,omitempty"`
+	SpillCreated            bool   `json:"spill_created"`
+}
+
 // TurnTrace is the finished record for one agent.Run. It is the value
 // emitters serialize; it is not mutated after Finish returns a snapshot.
 type TurnTrace struct {
-	SessionID           string       `json:"session_id"`
-	RunID               string       `json:"run_id"`
-	Profile             string       `json:"profile,omitempty"`
-	StartedAt           time.Time    `json:"started_at"`
-	FirstVisibleEventAt time.Time    `json:"first_visible_event_at,omitempty"`
-	FirstUsefulActionAt time.Time    `json:"first_useful_action_at,omitempty"`
-	FirstTokenAt        time.Time    `json:"first_token_at,omitempty"`
-	CompletedAt         time.Time    `json:"completed_at"`
-	Spans               []Span       `json:"spans"`
-	Counters            []Counter    `json:"counters"`
-	PrefixHashes        []PrefixHash `json:"prefix_hashes,omitempty"`
+	SessionID           string              `json:"session_id"`
+	RunID               string              `json:"run_id"`
+	Profile             string              `json:"profile,omitempty"`
+	StartedAt           time.Time           `json:"started_at"`
+	FirstVisibleEventAt time.Time           `json:"first_visible_event_at,omitempty"`
+	FirstUsefulActionAt time.Time           `json:"first_useful_action_at,omitempty"`
+	FirstTokenAt        time.Time           `json:"first_token_at,omitempty"`
+	CompletedAt         time.Time           `json:"completed_at"`
+	Spans               []Span              `json:"spans"`
+	Counters            []Counter           `json:"counters"`
+	PrefixHashes        []PrefixHash        `json:"prefix_hashes,omitempty"`
+	OutputBudgets       []OutputBudgetEvent `json:"output_budgets,omitempty"`
 }
 
 // PrefixHash is one fingerprint of the prompt prefix emitted by an agent run.

From 57e26e60420ba4755a1eedccfbab39566111447a Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 20:49:24 +0530
Subject: [PATCH 06/15] perf(output): classify core tool output

---
 internal/agent/ask_user_test.go        |   7 +-
 internal/tools/bash.go                 |   8 ++
 internal/tools/exec_command.go         |  12 +++
 internal/tools/glob.go                 |  17 ++--
 internal/tools/grep.go                 |  25 ++----
 internal/tools/list_directory.go       |  12 ++-
 internal/tools/output_boundary.go      | 111 +++++++++++++++++++++----
 internal/tools/output_boundary_test.go |  83 ++++++++++++++++++
 internal/tools/output_budget.go        |  26 +++++-
 internal/tools/output_ceiling.go       |  23 ++---
 internal/tools/output_ceiling_test.go  |  10 +--
 internal/tools/read_file.go            |  27 ++++--
 internal/tools/read_minified_file.go   |  24 ++++--
 internal/tools/registry.go             |   4 +-
 14 files changed, 302 insertions(+), 87 deletions(-)

diff --git a/internal/agent/ask_user_test.go b/internal/agent/ask_user_test.go
index 4bb77c201..3dea26146 100644
--- a/internal/agent/ask_user_test.go
+++ b/internal/agent/ask_user_test.go
@@ -141,9 +141,11 @@ func TestRunAskUserCancellationAbortsRun(t *testing.T) {
 	registry := registryWithAskUser()
 	args := `{"questions":[{"question":"Which framework?"}]}`
 	provider := providerCallingAskUserThenAnswer(args, "done")
+	var toolResults []ToolResult
 
 	result, err := Run(context.Background(), "clarify", provider, Options{
-		Registry: registry,
+		Registry:     registry,
+		OnToolResult: func(result ToolResult) { toolResults = append(toolResults, result) },
 		OnAskUser: func(_ context.Context, _ AskUserRequest) (AskUserResponse, error) {
 			return AskUserResponse{}, context.Canceled
 		},
@@ -158,6 +160,9 @@ func TestRunAskUserCancellationAbortsRun(t *testing.T) {
 	if len(provider.requests) != 1 {
 		t.Fatalf("expected the run to stop after the canceled ask_user (1 turn), got %d", len(provider.requests))
 	}
+	if len(toolResults) != 1 || toolResults[0].ToolCallID == "" {
+		t.Fatalf("cancellation must emit exactly one result for the call, got %#v", toolResults)
+	}
 	// The recorded tool result must reflect cancellation, not a synthetic answer.
 	var toolMsg string
 	for _, m := range result.Messages {
diff --git a/internal/tools/bash.go b/internal/tools/bash.go
index c5a6861a6..90b36bc0a 100644
--- a/internal/tools/bash.go
+++ b/internal/tools/bash.go
@@ -23,6 +23,14 @@ type bashTool struct {
 	scope         PathScope
 }
 
+func (bashTool) outputCategory(args map[string]any) outputCategory {
+	command, _ := args["command"].(string)
+	if command == "" {
+		command, _ = args["cmd"].(string)
+	}
+	return shellOutputCategory(command)
+}
+
 func NewBashTool(workspaceRoot string) Tool {
 	return NewScopedBashTool(workspaceRoot, nil)
 }
diff --git a/internal/tools/exec_command.go b/internal/tools/exec_command.go
index 8220b1c39..4a7191a86 100644
--- a/internal/tools/exec_command.go
+++ b/internal/tools/exec_command.go
@@ -427,6 +427,14 @@ type execCommandTool struct {
 	manager       *execSessionManager
 }
 
+func (execCommandTool) outputCategory(args map[string]any) outputCategory {
+	command, _ := args["cmd"].(string)
+	if command == "" {
+		command, _ = args["command"].(string)
+	}
+	return shellOutputCategory(command)
+}
+
 func NewExecCommandTool(workspaceRoot string, manager *execSessionManager) Tool {
 	return NewScopedExecCommandTool(workspaceRoot, nil, manager)
 }
@@ -694,6 +702,10 @@ type writeStdinTool struct {
 	manager *execSessionManager
 }
 
+func (writeStdinTool) outputCategory(map[string]any) outputCategory {
+	return outputCategoryProcess
+}
+
 func NewWriteStdinTool(manager *execSessionManager) Tool {
 	if manager == nil {
 		manager = defaultExecSessionManager
diff --git a/internal/tools/glob.go b/internal/tools/glob.go
index b54462abc..232667f59 100644
--- a/internal/tools/glob.go
+++ b/internal/tools/glob.go
@@ -18,6 +18,8 @@ type globTool struct {
 	scope         PathScope
 }
 
+func (globTool) outputCategory(map[string]any) outputCategory { return outputCategorySearch }
+
 func NewGlobTool(workspaceRoot string) Tool {
 	return NewScopedGlobTool(workspaceRoot, nil)
 }
@@ -110,22 +112,17 @@ func (tool globTool) runWith(ctx context.Context, args map[string]any, exclude r
 	if truncated {
 		output += fmt.Sprintf("\n\n[truncated: showing first %d of %d matches; increase limit or narrow cwd/pattern]", len(matches), totalMatches)
 	}
-	budgeted := applyOutputBudget(output, searchOutputBudgetBytes, "increase limit or narrow cwd/pattern")
-	meta := outputBudgetMeta(budgeted)
+	meta := map[string]string{}
 	meta["pattern"] = pattern
-	if truncated || budgeted.Truncated {
+	if truncated {
 		meta["truncated"] = "true"
-		if budgeted.Truncated {
-			meta["truncation_reason"] = "byte_budget"
-		} else {
-			meta["truncation_reason"] = "limit"
-		}
+		meta["truncation_reason"] = "limit"
 	}
 
 	return Result{
 		Status:    StatusOK,
-		Output:    budgeted.Output,
-		Truncated: truncated || budgeted.Truncated,
+		Output:    output,
+		Truncated: truncated,
 		Meta:      meta,
 	}
 }
diff --git a/internal/tools/grep.go b/internal/tools/grep.go
index 8827bb619..d2058e500 100644
--- a/internal/tools/grep.go
+++ b/internal/tools/grep.go
@@ -21,6 +21,8 @@ type grepTool struct {
 	scope         PathScope
 }
 
+func (grepTool) outputCategory(map[string]any) outputCategory { return outputCategorySearch }
+
 type grepMatch struct {
 	file string
 	line int
@@ -455,13 +457,7 @@ func (collector *grepFileListCollector) result() Result {
 		return okResult("No matches found.")
 	}
 	sort.Strings(collector.files)
-	budgeted := applyOutputBudget(strings.Join(collector.files, "\n"), searchOutputBudgetBytes, "narrow path/glob/pattern to continue")
-	meta := outputBudgetMeta(budgeted)
-	if budgeted.Truncated {
-		meta["truncated"] = "true"
-		meta["truncation_reason"] = "byte_budget"
-	}
-	return Result{Status: StatusOK, Output: budgeted.Output, Truncated: budgeted.Truncated, Meta: meta}
+	return Result{Status: StatusOK, Output: strings.Join(collector.files, "\n")}
 }
 
 type grepContentCollector struct {
@@ -494,20 +490,15 @@ func (collector *grepContentCollector) result() Result {
 	if truncated {
 		output += fmt.Sprintf("\n\n[truncated: showing first %d matches; narrow path/glob/pattern or increase head_limit]", len(lines))
 	}
-	budgeted := applyOutputBudget(output, searchOutputBudgetBytes, "narrow path/glob/pattern or increase head_limit")
-	meta := outputBudgetMeta(budgeted)
-	if truncated || budgeted.Truncated {
+	meta := map[string]string{}
+	if truncated {
 		meta["truncated"] = "true"
-		if budgeted.Truncated {
-			meta["truncation_reason"] = "byte_budget"
-		} else {
-			meta["truncation_reason"] = "head_limit"
-		}
+		meta["truncation_reason"] = "head_limit"
 	}
 	return Result{
 		Status:    StatusOK,
-		Output:    budgeted.Output,
-		Truncated: truncated || budgeted.Truncated,
+		Output:    output,
+		Truncated: truncated,
 		Meta:      meta,
 	}
 }
diff --git a/internal/tools/list_directory.go b/internal/tools/list_directory.go
index 429cf948b..2d0757ad9 100644
--- a/internal/tools/list_directory.go
+++ b/internal/tools/list_directory.go
@@ -15,6 +15,10 @@ type listDirectoryTool struct {
 	scope         PathScope
 }
 
+func (listDirectoryTool) outputCategory(map[string]any) outputCategory {
+	return outputCategorySearch
+}
+
 func NewListDirectoryTool(workspaceRoot string) Tool {
 	return NewScopedListDirectoryTool(workspaceRoot, nil)
 }
@@ -76,13 +80,7 @@ func (tool listDirectoryTool) Run(_ context.Context, args map[string]any) Result
 		return okResult("Directory is empty: " + relativePath)
 	}
 	output := "Contents of " + relativePath + ":\n\n" + strings.Join(entries, "\n")
-	budgeted := applyOutputBudget(output, searchOutputBudgetBytes, "use path, recursive=false, or a smaller max_depth to narrow the listing")
-	meta := outputBudgetMeta(budgeted)
-	if budgeted.Truncated {
-		meta["truncated"] = "true"
-		meta["truncation_reason"] = "byte_budget"
-	}
-	return Result{Status: StatusOK, Output: budgeted.Output, Truncated: budgeted.Truncated, Meta: meta}
+	return Result{Status: StatusOK, Output: output}
 }
 
 func listDirectoryEntries(path string, depth int, maxDepth int) ([]string, error) {
diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index 5d17d07a4..60e70fdde 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -1,7 +1,6 @@
 package tools
 
 import (
-	"fmt"
 	"strconv"
 	"strings"
 )
@@ -19,19 +18,12 @@ const (
 // applyRegistryOutputBudget is the common post-redaction semantic budgeting
 // boundary for tools that do not already own a deliberate output budget.
 func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any, result Result) Result {
-	ceilingTokens := resolveOutputCeilingTokens()
-	if ceilingTokens <= 0 {
+	budget := registryOutputBudget(toolName)
+	if budget.maxEstimatedTokens <= 0 && budget.hardMaxBytes <= 0 {
 		return result // preserve ZERO_TOOL_OUTPUT_CEILING_TOKENS=0 semantics
 	}
 
-	category := outputCategoryDefault
-	if provider, ok := tool.(outputPolicyProvider); ok {
-		category = provider.outputCategory(args)
-	}
-	budget := outputBudget{
-		maxEstimatedTokens: ceilingTokens,
-		hardMaxBytes:       ceilingTokens * 4,
-	}
+	category := resolveOutputCategory(tool, toolName, args)
 	budgeted := budgetSemanticOutput(result.Output, category, budget)
 	if budgeted.truncated {
 		budgeted = attachExistingSpill(toolName, result.Output, budget, budgeted)
@@ -42,6 +34,86 @@ func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any,
 	return result
 }
 
+func registryOutputBudget(toolName string) outputBudget {
+	switch toolName {
+	case "read_file", "read_minified_file":
+		return outputBudget{maxEstimatedTokens: readOutputBudgetBytes / 4, hardMaxBytes: readOutputBudgetBytes}
+	case "grep", "glob", "list_directory":
+		return outputBudget{maxEstimatedTokens: searchOutputBudgetBytes / 4, hardMaxBytes: searchOutputBudgetBytes}
+	default:
+		ceilingTokens := resolveOutputCeilingTokens()
+		if ceilingTokens <= 0 {
+			return outputBudget{}
+		}
+		return outputBudget{maxEstimatedTokens: ceilingTokens, hardMaxBytes: ceilingTokens * 4}
+	}
+}
+
+func resolveOutputCategory(tool Tool, toolName string, args map[string]any) outputCategory {
+	if provider, ok := tool.(outputPolicyProvider); ok {
+		if category := provider.outputCategory(args); category != "" {
+			return category
+		}
+	}
+	switch toolName {
+	case "Task", "swarm_collect":
+		return outputCategoryWorker
+	case "apply_patch":
+		return outputCategoryDiff
+	case "write_stdin":
+		return outputCategoryProcess
+	default:
+		return outputCategoryDefault
+	}
+}
+
+// annotateSelfBudgetedOutput records the same compact metadata for tools whose
+// existing capture/budget implementation remains authoritative in PR11. It
+// does not re-budget their text or claim that raw_bytes represents every byte a
+// subprocess produced beyond its established capture limits.
+func annotateSelfBudgetedOutput(tool Tool, toolName string, args map[string]any, result Result) Result {
+	retainedBytes := len(result.Output)
+	originalBytes := retainedBytes
+	if parsed, err := strconv.Atoi(result.Meta["raw_bytes"]); err == nil && parsed > originalBytes {
+		originalBytes = parsed
+	}
+	retainedTokens := estimateOutputTokens(result.Output)
+	originalTokens := retainedTokens
+	if originalBytes > retainedBytes {
+		originalTokens = max(originalTokens, estimatedTokensFromBytes(originalBytes))
+	}
+	reason := result.Meta["truncation_reason"]
+	if result.Truncated && reason == "" {
+		reason = "upstream_tool_budget"
+	}
+	observed := budgetedOutput{
+		text:                    result.Output,
+		originalBytes:           originalBytes,
+		retainedBytes:           retainedBytes,
+		estimatedOriginalTokens: originalTokens,
+		estimatedRetainedTokens: retainedTokens,
+		truncated:               result.Truncated,
+		category:                resolveOutputCategory(tool, toolName, args),
+		reason:                  reason,
+		spillPath:               result.Meta["spill_path"],
+	}
+	result.Meta = addOutputBudgetMetadata(result.Meta, observed)
+	return result
+}
+
+func shellOutputCategory(command string) outputCategory {
+	normalized := strings.ToLower(strings.TrimSpace(command))
+	if containsAny(normalized,
+		"go test", "pytest", "python -m pytest", "cargo test", "npm test", "npm run test",
+		"pnpm test", "yarn test", "bun test", "dotnet test", "mvn test", "gradle test", "phpunit") {
+		return outputCategoryTest
+	}
+	if containsAny(normalized, "git diff", "git show", "git format-patch", " diff -u", "diff --git") || strings.HasPrefix(normalized, "diff ") {
+		return outputCategoryDiff
+	}
+	return outputCategoryProcess
+}
+
 // attachExistingSpill reuses Zero's hardened per-user spill directory. output
 // is the already-redacted text received by this layer; it may itself be a
 // capture-bounded view produced by a subprocess tool.
@@ -61,6 +133,7 @@ func attachExistingSpill(toolName, output string, budget outputBudget, current b
 		// An unusually long temp path or tiny configured ceiling can leave no
 		// room for the full notice. Keep the safe bounded result; the spill still
 		// exists but is intentionally not advertised with a chopped reference.
+		current.spillPath = path
 		return current
 	}
 	base.text = text
@@ -85,9 +158,15 @@ func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[
 	}
 	if output.truncated {
 		// Preserve the existing metadata vocabulary used by callers and tests.
-		meta["raw_bytes"] = strconv.Itoa(output.originalBytes)
-		meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
-		meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
+		if _, exists := meta["raw_bytes"]; !exists {
+			meta["raw_bytes"] = strconv.Itoa(output.originalBytes)
+		}
+		if _, exists := meta["emitted_bytes"]; !exists {
+			meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
+		}
+		if _, exists := meta["estimated_tokens"]; !exists {
+			meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
+		}
 		meta["truncated"] = "true"
 		meta["truncation_reason"] = output.reason
 	}
@@ -96,7 +175,3 @@ func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[
 	}
 	return meta
 }
-
-func outputBudgetDebugString(output budgetedOutput) string {
-	return fmt.Sprintf("category=%s original=%d retained=%d truncated=%t reason=%s", output.category, output.originalBytes, output.retainedBytes, output.truncated, output.reason)
-}
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index 4b239faac..c1cc9bc84 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -83,3 +83,86 @@ func TestRegistrySmallOutputRemainsByteIdentical(t *testing.T) {
 		t.Fatalf("small output changed: %#v", result)
 	}
 }
+
+func TestRegistryLargeFileUsesSemanticFilePolicy(t *testing.T) {
+	setTestTempDir(t)
+	root := t.TempDir()
+	var content strings.Builder
+	content.WriteString("HEAD_MARK\n")
+	for line := 0; line < 7000; line++ {
+		content.WriteString("ordinary source line with enough text to fill the output budget\n")
+	}
+	content.WriteString("TAIL_MARK\n")
+	if err := os.WriteFile(filepath.Join(root, "large.txt"), []byte(content.String()), 0o600); err != nil {
+		t.Fatal(err)
+	}
+	registry := NewRegistry()
+	registry.Register(NewReadFileTool(root))
+	result := registry.Run(context.Background(), "read_file", map[string]any{"path": "large.txt"})
+	if !result.Truncated || result.Meta[outputBudgetCategoryMeta] != string(outputCategoryFile) {
+		t.Fatalf("large file was not semantically budgeted: truncated=%t meta=%#v", result.Truncated, result.Meta)
+	}
+	if len(result.Output) > readOutputBudgetBytes {
+		t.Fatalf("large file output = %d bytes, ceiling %d", len(result.Output), readOutputBudgetBytes)
+	}
+	for _, want := range []string{"File: large.txt", "HEAD_MARK", "TAIL_MARK"} {
+		if !strings.Contains(result.Output, want) {
+			t.Fatalf("large file output missing %q", want)
+		}
+	}
+}
+
+func TestRegistryGrepUsesSemanticMultiFileCoverage(t *testing.T) {
+	setTestTempDir(t)
+	root := t.TempDir()
+	for _, name := range []string{"a.txt", "b.txt", "c.txt", "d.txt"} {
+		body := strings.Repeat("needle "+strings.Repeat(name, 15)+"\n", 350)
+		if err := os.WriteFile(filepath.Join(root, name), []byte(body), 0o600); err != nil {
+			t.Fatal(err)
+		}
+	}
+	registry := NewRegistry()
+	registry.Register(NewGrepTool(root))
+	result := registry.Run(context.Background(), "grep", map[string]any{
+		"pattern":    "needle",
+		"path":       ".",
+		"head_limit": 1400,
+	})
+	if !result.Truncated || result.Meta[outputBudgetCategoryMeta] != string(outputCategorySearch) {
+		t.Fatalf("grep was not semantically budgeted: truncated=%t meta=%#v", result.Truncated, result.Meta)
+	}
+	for _, name := range []string{"a.txt:", "b.txt:", "c.txt:", "d.txt:"} {
+		if !strings.Contains(result.Output, name) {
+			t.Fatalf("search output lost %s coverage", name)
+		}
+	}
+}
+
+func TestShellOutputCategoryClassification(t *testing.T) {
+	tests := []struct {
+		command string
+		want    outputCategory
+	}{
+		{"go test ./...", outputCategoryTest},
+		{"python -m pytest -q", outputCategoryTest},
+		{"git diff --stat main...HEAD", outputCategoryDiff},
+		{"git show HEAD", outputCategoryDiff},
+		{"make build", outputCategoryProcess},
+	}
+	for _, test := range tests {
+		if got := shellOutputCategory(test.command); got != test.want {
+			t.Errorf("shellOutputCategory(%q) = %q, want %q", test.command, got, test.want)
+		}
+	}
+}
+
+func TestSelfBudgetedToolDeclaresSemanticCategoryWithoutRebudgeting(t *testing.T) {
+	registry := NewRegistry()
+	registry.Register(NewBashTool(t.TempDir()))
+	tool, _ := registry.Get("bash")
+	result := Result{Status: StatusOK, Output: "already bounded", Meta: map[string]string{}}
+	got := annotateSelfBudgetedOutput(tool, "bash", map[string]any{"command": "go test ./..."}, result)
+	if got.Output != result.Output || got.Meta[outputBudgetCategoryMeta] != string(outputCategoryTest) {
+		t.Fatalf("self-budgeted category annotation changed output or lost category: %#v", got)
+	}
+}
diff --git a/internal/tools/output_budget.go b/internal/tools/output_budget.go
index e21bdf22c..fc5ca745f 100644
--- a/internal/tools/output_budget.go
+++ b/internal/tools/output_budget.go
@@ -223,13 +223,37 @@ func newOutputBudgetBuilder(maxBytes int, hint string) *outputBudgetBuilder {
 
 func (builder *outputBudgetBuilder) WriteString(value string) {
 	builder.rawBytes += len(value)
-	if builder.maxBytes <= 0 || builder.builder.Len() >= builder.maxBytes {
+	if builder.maxBytes <= 0 {
+		builder.builder.WriteString(value)
+		return
+	}
+	if builder.builder.Len() >= builder.maxBytes {
 		return
 	}
 	remaining := builder.maxBytes - builder.builder.Len()
 	builder.builder.WriteString(utf8Prefix(value, remaining))
 }
 
+// applyLegacyByteBudgetToResult preserves direct Tool.Run behavior for callers
+// that intentionally bypass Registry.RunWithOptions. Agent/MCP execution uses
+// the registry's post-redaction semantic boundary instead.
+func applyLegacyByteBudgetToResult(result Result, maxBytes int, hint string) Result {
+	budgeted := applyOutputBudget(result.Output, maxBytes, hint)
+	result.Output = budgeted.Output
+	result.Truncated = result.Truncated || budgeted.Truncated
+	if result.Meta == nil {
+		result.Meta = map[string]string{}
+	}
+	for key, value := range outputBudgetMeta(budgeted) {
+		result.Meta[key] = value
+	}
+	if budgeted.Truncated {
+		result.Meta["truncated"] = "true"
+		result.Meta["truncation_reason"] = "byte_budget"
+	}
+	return result
+}
+
 func (builder *outputBudgetBuilder) Result() outputBudgetResult {
 	output := builder.builder.String()
 	result := outputBudgetResult{
diff --git a/internal/tools/output_ceiling.go b/internal/tools/output_ceiling.go
index b911b6950..af6a7b8e0 100644
--- a/internal/tools/output_ceiling.go
+++ b/internal/tools/output_ceiling.go
@@ -31,17 +31,12 @@ const outputCeilingEnv = "ZERO_TOOL_OUTPUT_CEILING_TOKENS"
 // package can opt out, so an MCP-served tool can never exempt itself.
 type selfBudgeting interface{ managesOutputBudget() }
 
-// The exemption list, kept in one place. Each of these applies its own budget
-// before returning: bash (bashOutputBudgetBytes per stream + spill),
-// exec_command (model-raisable token budget + spill), read tools (128 KiB),
-// search tools (64 KiB).
-func (bashTool) managesOutputBudget()             {}
-func (execCommandTool) managesOutputBudget()      {}
-func (readFileTool) managesOutputBudget()         {}
-func (readMinifiedFileTool) managesOutputBudget() {}
-func (grepTool) managesOutputBudget()             {}
-func (globTool) managesOutputBudget()             {}
-func (listDirectoryTool) managesOutputBudget()    {}
+// The exemption list, kept in one place. Shell/process tools retain their
+// established capture-aware budgets: bash (per-stream budget + spill) and
+// exec_command (model-raisable budget + spill). File/search tools now use the
+// shared post-redaction semantic boundary.
+func (bashTool) managesOutputBudget()        {}
+func (execCommandTool) managesOutputBudget() {}
 
 func resolveOutputCeilingTokens() int {
 	raw := strings.TrimSpace(os.Getenv(outputCeilingEnv))
@@ -61,6 +56,12 @@ func resolveOutputCeilingTokens() int {
 // and the spill file agree on what was hidden.
 func enforceOutputCeiling(toolName string, result Result) Result {
 	ceiling := resolveOutputCeilingTokens()
+	switch toolName {
+	case "read_file", "read_minified_file":
+		ceiling = readOutputBudgetBytes / 4
+	case "grep", "glob", "list_directory":
+		ceiling = searchOutputBudgetBytes / 4
+	}
 	if ceiling <= 0 {
 		return result
 	}
diff --git a/internal/tools/output_ceiling_test.go b/internal/tools/output_ceiling_test.go
index 0639a23d2..6cac61a06 100644
--- a/internal/tools/output_ceiling_test.go
+++ b/internal/tools/output_ceiling_test.go
@@ -123,11 +123,6 @@ func TestSelfBudgetingExemptionList(t *testing.T) {
 	exempt := []Tool{
 		NewBashTool(dir),
 		NewExecCommandTool(dir, newExecSessionManager()),
-		NewReadFileTool(dir),
-		NewReadMinifiedFileTool(dir),
-		NewGrepTool(dir),
-		NewGlobTool(dir),
-		NewListDirectoryTool(dir),
 	}
 	for _, tool := range exempt {
 		if _, ok := tool.(selfBudgeting); !ok {
@@ -137,4 +132,9 @@ func TestSelfBudgetingExemptionList(t *testing.T) {
 	if _, ok := NewWebFetchTool().(selfBudgeting); ok {
 		t.Error("web_fetch must NOT be exempt — the ceiling is its only budget")
 	}
+	for _, tool := range []Tool{NewReadFileTool(dir), NewReadMinifiedFileTool(dir), NewGrepTool(dir), NewGlobTool(dir), NewListDirectoryTool(dir)} {
+		if _, ok := tool.(selfBudgeting); ok {
+			t.Errorf("%s must use the shared post-redaction budget boundary", tool.Name())
+		}
+	}
 }
diff --git a/internal/tools/read_file.go b/internal/tools/read_file.go
index 15e3d1abe..8c8787096 100644
--- a/internal/tools/read_file.go
+++ b/internal/tools/read_file.go
@@ -18,6 +18,8 @@ type readFileTool struct {
 	scope         PathScope
 }
 
+func (readFileTool) outputCategory(map[string]any) outputCategory { return outputCategoryFile }
+
 func NewReadFileTool(workspaceRoot string) Tool {
 	return NewScopedReadFileTool(workspaceRoot, nil)
 }
@@ -50,10 +52,14 @@ func NewScopedReadFileTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool readFileTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.RunWithOptions(ctx, args, RunOptions{})
+	return tool.run(args, RunOptions{}, true)
 }
 
 func (tool readFileTool) RunWithOptions(_ context.Context, args map[string]any, options RunOptions) Result {
+	return tool.run(args, options, false)
+}
+
+func (tool readFileTool) run(args map[string]any, options RunOptions, directBudget bool) Result {
 	requestedPath, err := aliasedStringArg(args, []string{"path", "file", "file_path", "filepath", "filename"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for read_file: " + err.Error())
@@ -86,7 +92,11 @@ func (tool readFileTool) RunWithOptions(_ context.Context, args map[string]any,
 	// not the authoritative content hash.
 	options.FileTracker.RecordHash(absolutePath, stats.hash, stats.info)
 
-	return renderReadFileRange(absolutePath, relativePath, stats.lines, startLine, endLine, maxLines)
+	result := renderReadFileRange(absolutePath, relativePath, stats.lines, startLine, endLine, maxLines)
+	if directBudget {
+		return applyLegacyByteBudgetToResult(result, readOutputBudgetBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+	}
+	return result
 }
 
 func renderReadFileRange(absolutePath string, relativePath string, total int, startLine int, endLine int, maxLines int) Result {
@@ -114,7 +124,10 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 		header = fmt.Sprintf("File: %s (lines %d-%d of %d)", relativePath, startLine, lastLine, total)
 	}
 
-	budgetedOutput := newOutputBudgetBuilder(readOutputBudgetBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+	// The shared registry boundary applies the file policy after redaction. Build
+	// the requested range here without a second byte-prefix truncation so that
+	// policy can retain both its beginning and end.
+	budgetedOutput := newOutputBudgetBuilder(0, "")
 	budgetedOutput.WriteString(header)
 	budgetedOutput.WriteString("\n\n")
 	if err := appendReadFileRange(budgetedOutput, absolutePath, startLine, selectedLines, width); err != nil {
@@ -128,15 +141,15 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 	}
 
 	budgeted := budgetedOutput.Result()
-	meta := outputBudgetMeta(budgeted)
-	if budgeted.Truncated {
+	meta := map[string]string{}
+	if truncated {
 		meta["truncated"] = "true"
-		meta["truncation_reason"] = "byte_budget"
+		meta["truncation_reason"] = "max_lines"
 	}
 	return Result{
 		Status:    StatusOK,
 		Output:    budgeted.Output,
-		Truncated: truncated || budgeted.Truncated,
+		Truncated: truncated,
 		Meta:      meta,
 	}
 }
diff --git a/internal/tools/read_minified_file.go b/internal/tools/read_minified_file.go
index beacd5986..34fd79354 100644
--- a/internal/tools/read_minified_file.go
+++ b/internal/tools/read_minified_file.go
@@ -16,6 +16,10 @@ type readMinifiedFileTool struct {
 	scope         PathScope
 }
 
+func (readMinifiedFileTool) outputCategory(map[string]any) outputCategory {
+	return outputCategoryFile
+}
+
 func NewReadMinifiedFileTool(workspaceRoot string) Tool {
 	return NewScopedReadMinifiedFileTool(workspaceRoot, nil)
 }
@@ -42,10 +46,14 @@ func NewScopedReadMinifiedFileTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool readMinifiedFileTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.RunWithOptions(ctx, args, RunOptions{})
+	return tool.run(args, RunOptions{}, true)
 }
 
 func (tool readMinifiedFileTool) RunWithOptions(_ context.Context, args map[string]any, options RunOptions) Result {
+	return tool.run(args, options, false)
+}
+
+func (tool readMinifiedFileTool) run(args map[string]any, options RunOptions, directBudget bool) Result {
 	requestedPath, err := aliasedStringArg(args, []string{"path", "file", "file_path", "filepath", "filename"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for read_minified_file: " + err.Error())
@@ -92,23 +100,21 @@ func (tool readMinifiedFileTool) RunWithOptions(_ context.Context, args map[stri
 		savedTokens = estimatedTokensFromBytes(savedBytes)
 	}
 	output := header + "\n\n" + result.Content
-	budgeted := applyOutputBudget(output, readOutputBudgetBytes, "use read_file with start_line/end_line or max_lines for a smaller exact range")
-	meta := outputBudgetMeta(budgeted)
+	meta := map[string]string{}
 	meta["path"] = relativePath
 	meta["mode"] = result.Language
 	meta["compacted"] = strconv.FormatBool(result.Applied)
 	meta["raw_bytes"] = strconv.Itoa(rawBytes)
 	meta["compact_bytes"] = strconv.Itoa(compactBytes)
-	meta["emitted_bytes"] = strconv.Itoa(budgeted.EmittedBytes)
+	meta["emitted_bytes"] = strconv.Itoa(len(output))
 	meta["raw_lines"] = strconv.Itoa(rawLines)
 	meta["emitted_lines"] = strconv.Itoa(minLines)
 	meta["estimated_tokens_saved"] = strconv.Itoa(savedTokens)
-	if budgeted.Truncated {
-		meta["truncated"] = "true"
-		meta["truncation_reason"] = "byte_budget"
+	toolResult := Result{Status: StatusOK, Output: output, Meta: meta}
+	if directBudget {
+		return applyLegacyByteBudgetToResult(toolResult, readOutputBudgetBytes, "use read_file with start_line/end_line or max_lines for a smaller exact range")
 	}
-
-	return Result{Status: StatusOK, Output: budgeted.Output, Truncated: budgeted.Truncated, Meta: meta}
+	return toolResult
 }
 
 // lineCount reports the number of newline-separated lines in s (an empty string
diff --git a/internal/tools/registry.go b/internal/tools/registry.go
index cebd8d8c8..bd156786f 100644
--- a/internal/tools/registry.go
+++ b/internal/tools/registry.go
@@ -131,7 +131,9 @@ func (registry *Registry) RunWithOptions(ctx context.Context, name string, args
 	var ok bool
 	defer func() {
 		result = scrubResultSecrets(result)
-		if !ceilingExempt {
+		if ceilingExempt {
+			result = annotateSelfBudgetedOutput(tool, name, args, result)
+		} else {
 			result = applyRegistryOutputBudget(tool, name, args, result)
 			result = enforceOutputCeiling(name, result)
 		}

From ca33fc5feb0054fad122536f4068351d0a446de5 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 21:08:43 +0530
Subject: [PATCH 07/15] docs(output): describe semantic output budgeting

---
 docs/HOW_ZERO_WORKS.md | 19 ++++++++++++++++---
 1 file changed, 16 insertions(+), 3 deletions(-)

diff --git a/docs/HOW_ZERO_WORKS.md b/docs/HOW_ZERO_WORKS.md
index 7481114e1..b07e52af4 100644
--- a/docs/HOW_ZERO_WORKS.md
+++ b/docs/HOW_ZERO_WORKS.md
@@ -272,7 +272,8 @@ sequenceDiagram
         Agent->>Tool: execute(ctx, args)
         Tool-->>Agent: output, error, metadata
         Agent->>Hooks: afterTool hooks
-        Agent->>Agent: redact, truncate, classify success/failure
+        Agent->>Agent: redact secrets, apply semantic output budget, enforce byte ceiling
+        Agent->>Agent: classify success/failure
         Agent-->>Surface: OnToolResult callback
         Agent->>Transcript: append tool result message
     end
@@ -604,10 +605,22 @@ flowchart TD
     Prompt -- Yes --> Decision[Permission callback]
     Prompt -- No --> Run[Registry.RunWithOptions]
     Decision --> Run
-    Run --> Redact[Redact secrets + enforce output ceiling]
-    Redact --> Message[Return tool result to model]
+    Run --> Redact[Redact secrets]
+    Redact --> Budget[Token-aware semantic output budget]
+    Budget --> Ceiling[Existing hard byte ceiling]
+    Ceiling --> Message[Return one tool result to model]
 ```
 
+Oversized results use deterministic, provider-neutral estimated-token budgets.
+Policies retain useful structure for files, search matches, tests, process logs,
+diffs, and worker conclusions; tools without a declared category use a UTF-8-safe
+head/tail fallback. The estimate is intentionally conservative for non-ASCII
+text and is not exact provider tokenization. Existing byte ceilings remain the
+authoritative safety limit. When the existing spill mechanism can persist the
+complete redacted text received by the budgeting layer, the result includes its
+safe spill reference. This does not imply capture of subprocess bytes already
+discarded by a tool's established internal buffer.
+
 Core tool groups include:
 
 - **Read-only tools**: file reads, directory listing, glob, grep, LSP navigation,

From 4e7d7b3bba7697be1dcf1a084936c39c034c95d8 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 21:26:34 +0530
Subject: [PATCH 08/15] test(output): make spill fallback portable on windows

---
 internal/tools/output_boundary_test.go | 2 ++
 1 file changed, 2 insertions(+)

diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index c1cc9bc84..ce4774069 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -44,6 +44,8 @@ func TestRegistryBudgetSpillFailureFallsBackToBoundedOutput(t *testing.T) {
 		t.Fatal(err)
 	}
 	t.Setenv("TMPDIR", blockedTemp)
+	t.Setenv("TMP", blockedTemp)
+	t.Setenv("TEMP", blockedTemp)
 	t.Setenv(outputCeilingEnv, "100")
 
 	registry := NewRegistry()

From a68e8f3e42eac7a9d0e9251613d63e2ced3abdbe Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 21:43:02 +0530
Subject: [PATCH 09/15] fix(output): address semantic budgeting review findings

---
 internal/agent/loop.go                        |  1 +
 .../agent/output_budget_propagation_test.go   | 78 ++++++++++++++++
 internal/tools/glob.go                        | 20 +++-
 internal/tools/grep.go                        | 27 ++++--
 internal/tools/list_directory.go              | 14 ++-
 internal/tools/output_boundary.go             | 11 +++
 internal/tools/output_boundary_test.go        | 32 +++++++
 internal/tools/output_budget.go               | 16 +++-
 internal/tools/output_budget_test.go          | 16 ++++
 internal/tools/output_policies.go             | 91 +++++++++++++++++--
 internal/tools/read_file.go                   | 25 +++--
 11 files changed, 297 insertions(+), 34 deletions(-)

diff --git a/internal/agent/loop.go b/internal/agent/loop.go
index 7e860484d..61fed9711 100644
--- a/internal/agent/loop.go
+++ b/internal/agent/loop.go
@@ -1319,6 +1319,7 @@ func executeToolCall(ctx context.Context, registry *tools.Registry, call ToolCal
 			if didRedact {
 				result.Redacted = true
 			}
+			result = registry.RebudgetAfterHook(call.Name, args, result)
 		}
 	}
 	// Secret scrubbing happens at the registry boundary (the single point both
diff --git a/internal/agent/output_budget_propagation_test.go b/internal/agent/output_budget_propagation_test.go
index 93867b511..f02ad2795 100644
--- a/internal/agent/output_budget_propagation_test.go
+++ b/internal/agent/output_budget_propagation_test.go
@@ -2,11 +2,14 @@ package agent
 
 import (
 	"context"
+	"strconv"
 	"strings"
 	"testing"
 
+	"github.com/Gitlawb/zero/internal/hooks"
 	"github.com/Gitlawb/zero/internal/tools"
 	"github.com/Gitlawb/zero/internal/trace"
+	"github.com/Gitlawb/zero/internal/zeroruntime"
 )
 
 type propagationOutputTool struct {
@@ -74,3 +77,78 @@ func TestRecordOutputBudgetTraceUsesOnlyCompactMetadata(t *testing.T) {
 		t.Fatalf("unexpected trace event: %#v", event)
 	}
 }
+
+func TestExecuteToolCallRebudgetsOversizedAfterToolFeedback(t *testing.T) {
+	t.Setenv("ZERO_TOOL_OUTPUT_CEILING_TOKENS", "80")
+	registry := tools.NewRegistry()
+	registry.Register(propagationOutputTool{output: "tool output"})
+	dispatcher := hooks.NewDispatcher(hooks.DispatcherOptions{Config: hooks.Config{
+		Enabled: true,
+		Hooks: []hooks.Definition{{
+			ID:      "large-feedback",
+			Event:   hooks.EventAfterTool,
+			Matcher: "propagation_output",
+			Command: "echo",
+			Args:    []string{strings.Repeat("hook feedback ", 200)},
+			Enabled: true,
+		}},
+	}})
+
+	result, abortErr := executeToolCall(context.Background(), registry, ToolCall{
+		ID:        "call-hook-budget",
+		Name:      "propagation_output",
+		Arguments: `{}`,
+	}, PermissionModeAuto, Options{Hooks: dispatcher})
+	if abortErr != nil {
+		t.Fatalf("executeToolCall abort error: %v", abortErr)
+	}
+	if !result.Truncated || len(result.Output) > 80*4 {
+		t.Fatalf("afterTool feedback bypassed output budget: truncated=%t bytes=%d meta=%#v", result.Truncated, len(result.Output), result.Meta)
+	}
+	if result.Meta["output_budget_category"] == "" || result.Meta["output_budget_retained_bytes"] != strconv.Itoa(len(result.Output)) {
+		t.Fatalf("post-hook budget metadata does not describe final output: %#v", result.Meta)
+	}
+}
+
+func TestRunTraceReflectsPostHookBudget(t *testing.T) {
+	t.Setenv("ZERO_TOOL_OUTPUT_CEILING_TOKENS", "80")
+	registry := tools.NewRegistry()
+	registry.Register(propagationOutputTool{output: "tool output"})
+	dispatcher := hooks.NewDispatcher(hooks.DispatcherOptions{Config: hooks.Config{
+		Enabled: true,
+		Hooks: []hooks.Definition{{
+			ID:      "large-feedback",
+			Event:   hooks.EventAfterTool,
+			Matcher: "propagation_output",
+			Command: "echo",
+			Args:    []string{strings.Repeat("hook feedback ", 200)},
+			Enabled: true,
+		}},
+	}})
+	provider := &mockProvider{turns: [][]zeroruntime.StreamEvent{
+		{
+			{Type: zeroruntime.StreamEventToolCallStart, ToolCallID: "call-hook-trace", ToolName: "propagation_output"},
+			{Type: zeroruntime.StreamEventToolCallDelta, ToolCallID: "call-hook-trace", ArgumentsFragment: `{}`},
+			{Type: zeroruntime.StreamEventToolCallEnd, ToolCallID: "call-hook-trace"},
+			{Type: zeroruntime.StreamEventDone},
+		},
+		{{Type: zeroruntime.StreamEventText, Content: "done"}, {Type: zeroruntime.StreamEventDone}},
+	}}
+	recorder := trace.NewRecorder("session", "run", "")
+	var toolResults []ToolResult
+	if _, err := Run(context.Background(), "budget hook", provider, Options{
+		Registry:     registry,
+		Hooks:        dispatcher,
+		Trace:        recorder,
+		OnToolResult: func(result ToolResult) { toolResults = append(toolResults, result) },
+	}); err != nil {
+		t.Fatalf("Run: %v", err)
+	}
+	if len(toolResults) != 1 || !toolResults[0].Truncated {
+		t.Fatalf("tool result = %#v, want one truncated post-hook result", toolResults)
+	}
+	events := recorder.Finish().OutputBudgets
+	if len(events) != 1 || !events[0].Truncated || events[0].RetainedBytes != len(toolResults[0].Output) {
+		t.Fatalf("trace does not describe final post-hook output: events=%#v result=%#v", events, toolResults[0])
+	}
+}
diff --git a/internal/tools/glob.go b/internal/tools/glob.go
index 232667f59..a54e2b687 100644
--- a/internal/tools/glob.go
+++ b/internal/tools/glob.go
@@ -49,17 +49,25 @@ func NewScopedGlobTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool globTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.runWith(ctx, args, readExcluder{})
+	return tool.runWith(ctx, args, readExcluder{}, true)
+}
+
+func (tool globTool) RunWithOptions(ctx context.Context, args map[string]any, options RunOptions) Result {
+	exclude := readExcluder{}
+	if options.Sandbox != nil {
+		exclude = sandboxReadExcluder(options.Sandbox)
+	}
+	return tool.runWith(ctx, args, exclude, false)
 }
 
 // RunWithSandbox runs glob while skipping subtrees the sandbox policy denies
 // reads to (DenyRead). With no DenyRead configured the excluder is a no-op and
 // behavior is unchanged.
 func (tool globTool) RunWithSandbox(ctx context.Context, args map[string]any, engine *sandbox.Engine) Result {
-	return tool.runWith(ctx, args, sandboxReadExcluder(engine))
+	return tool.runWith(ctx, args, sandboxReadExcluder(engine), true)
 }
 
-func (tool globTool) runWith(ctx context.Context, args map[string]any, exclude readExcluder) Result {
+func (tool globTool) runWith(ctx context.Context, args map[string]any, exclude readExcluder, directBudget bool) Result {
 	pattern, err := aliasedStringArg(args, []string{"pattern", "glob", "match", "query", "expression"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for glob: " + err.Error())
@@ -119,12 +127,16 @@ func (tool globTool) runWith(ctx context.Context, args map[string]any, exclude r
 		meta["truncation_reason"] = "limit"
 	}
 
-	return Result{
+	result := Result{
 		Status:    StatusOK,
 		Output:    output,
 		Truncated: truncated,
 		Meta:      meta,
 	}
+	if directBudget {
+		return applyLegacyByteBudgetToResult(result, searchOutputBudgetBytes, "increase limit or narrow cwd/pattern")
+	}
+	return result
 }
 
 func scanGlob(ctx context.Context, root string, displayRoot string, matcher *regexp.Regexp, includeDirs bool, exclude readExcluder) ([]string, error) {
diff --git a/internal/tools/grep.go b/internal/tools/grep.go
index d2058e500..888e3932b 100644
--- a/internal/tools/grep.go
+++ b/internal/tools/grep.go
@@ -64,7 +64,15 @@ func NewScopedGrepTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool grepTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.runWith(ctx, args, readExcluder{})
+	return tool.runWith(ctx, args, readExcluder{}, true)
+}
+
+func (tool grepTool) RunWithOptions(ctx context.Context, args map[string]any, options RunOptions) Result {
+	exclude := readExcluder{}
+	if options.Sandbox != nil {
+		exclude = sandboxReadExcluder(options.Sandbox)
+	}
+	return tool.runWith(ctx, args, exclude, false)
 }
 
 // RunWithSandbox runs the search while skipping subtrees the sandbox policy
@@ -72,10 +80,10 @@ func (tool grepTool) Run(ctx context.Context, args map[string]any) Result {
 // path. With no DenyRead configured the excluder is a no-op and behavior is
 // unchanged.
 func (tool grepTool) RunWithSandbox(ctx context.Context, args map[string]any, engine *sandbox.Engine) Result {
-	return tool.runWith(ctx, args, sandboxReadExcluder(engine))
+	return tool.runWith(ctx, args, sandboxReadExcluder(engine), true)
 }
 
-func (tool grepTool) runWith(ctx context.Context, args map[string]any, exclude readExcluder) Result {
+func (tool grepTool) runWith(ctx context.Context, args map[string]any, exclude readExcluder, directBudget bool) Result {
 	pattern, err := aliasedStringArg(args, []string{"pattern", "query", "regex", "search", "expression"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for grep: " + err.Error())
@@ -156,7 +164,7 @@ func (tool grepTool) runWith(ctx context.Context, args map[string]any, exclude r
 			}
 			return errorResult("Error running grep: " + err.Error())
 		}
-		return collector.result()
+		return applyDirectSearchBudget(collector.result(), directBudget, "narrow path/glob/pattern to continue")
 	case "files_with_matches":
 		collector := &grepFileListCollector{}
 		if err := scanGrepMatches(ctx, resolvedRoot, target, globMatcher, exclude, absolutePaths, presenceGrepLineMatcher(compiled), collector.collect); err != nil {
@@ -165,7 +173,7 @@ func (tool grepTool) runWith(ctx context.Context, args map[string]any, exclude r
 			}
 			return errorResult("Error running grep: " + err.Error())
 		}
-		return collector.result()
+		return applyDirectSearchBudget(collector.result(), directBudget, "narrow path/glob/pattern to continue")
 	default:
 		collector := &grepContentCollector{headLimit: headLimit}
 		if err := scanGrepMatches(ctx, resolvedRoot, target, globMatcher, exclude, absolutePaths, presenceGrepLineMatcher(compiled), collector.collect); err != nil {
@@ -174,8 +182,15 @@ func (tool grepTool) runWith(ctx context.Context, args map[string]any, exclude r
 			}
 			return errorResult("Error running grep: " + err.Error())
 		}
-		return collector.result()
+		return applyDirectSearchBudget(collector.result(), directBudget, "narrow path/glob/pattern or increase head_limit")
+	}
+}
+
+func applyDirectSearchBudget(result Result, directBudget bool, hint string) Result {
+	if !directBudget {
+		return result
 	}
+	return applyLegacyByteBudgetToResult(result, searchOutputBudgetBytes, hint)
 }
 
 // resolveGrepRoot picks the scope root whose EvalSymlinks-resolved path contains
diff --git a/internal/tools/list_directory.go b/internal/tools/list_directory.go
index 2d0757ad9..dd764bd6f 100644
--- a/internal/tools/list_directory.go
+++ b/internal/tools/list_directory.go
@@ -46,6 +46,14 @@ func NewScopedListDirectoryTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool listDirectoryTool) Run(_ context.Context, args map[string]any) Result {
+	return tool.run(args, true)
+}
+
+func (tool listDirectoryTool) RunWithOptions(_ context.Context, args map[string]any, _ RunOptions) Result {
+	return tool.run(args, false)
+}
+
+func (tool listDirectoryTool) run(args map[string]any, directBudget bool) Result {
 	// Optional with a "." default: treat an explicit empty path (a common
 	// weak-model quirk) the same as the key being absent rather than erroring.
 	requestedPath, err := aliasedStringArg(args, []string{"path", "directory", "dir"}, ".", false, true)
@@ -80,7 +88,11 @@ func (tool listDirectoryTool) Run(_ context.Context, args map[string]any) Result
 		return okResult("Directory is empty: " + relativePath)
 	}
 	output := "Contents of " + relativePath + ":\n\n" + strings.Join(entries, "\n")
-	return Result{Status: StatusOK, Output: output}
+	result := Result{Status: StatusOK, Output: output}
+	if directBudget {
+		return applyLegacyByteBudgetToResult(result, searchOutputBudgetBytes, "use path, recursive=false, or a smaller max_depth to narrow the listing")
+	}
+	return result
 }
 
 func listDirectoryEntries(path string, depth int, maxDepth int) ([]string, error) {
diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index 60e70fdde..d88d6b0d3 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -34,6 +34,17 @@ func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any,
 	return result
 }
 
+// RebudgetAfterHook reapplies the registry's redaction and output limits after
+// an afterTool hook appends model-visible feedback to a completed result. The
+// initial registry pass has already run; this second pass is limited to the
+// newly combined result so hooks cannot bypass the established safety ceiling.
+func (registry *Registry) RebudgetAfterHook(toolName string, args map[string]any, result Result) Result {
+	result = scrubResultSecrets(result)
+	tool, _ := registry.Get(toolName)
+	result = applyRegistryOutputBudget(tool, toolName, args, result)
+	return enforceOutputCeiling(toolName, result)
+}
+
 func registryOutputBudget(toolName string) outputBudget {
 	switch toolName {
 	case "read_file", "read_minified_file":
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index ce4774069..884ccb8a6 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -2,6 +2,7 @@ package tools
 
 import (
 	"context"
+	"fmt"
 	"os"
 	"path/filepath"
 	"strconv"
@@ -86,6 +87,37 @@ func TestRegistrySmallOutputRemainsByteIdentical(t *testing.T) {
 	}
 }
 
+func TestDirectReadAndSearchToolsKeepLegacyByteBudgets(t *testing.T) {
+	root := t.TempDir()
+	if err := os.WriteFile(filepath.Join(root, "large-read.txt"), []byte(strings.Repeat("source line with enough content\n", 7000)), 0o600); err != nil {
+		t.Fatal(err)
+	}
+	if result := NewReadFileTool(root).Run(context.Background(), map[string]any{"path": "large-read.txt"}); !result.Truncated || len(result.Output) > readOutputBudgetBytes {
+		t.Fatalf("direct read_file output is not bounded: %#v", result)
+	}
+
+	for index := 0; index < 800; index++ {
+		name := fmt.Sprintf("%04d-%s.txt", index, strings.Repeat("n", 80))
+		if err := os.WriteFile(filepath.Join(root, name), []byte("match\n"), 0o600); err != nil {
+			t.Fatal(err)
+		}
+	}
+	if err := os.WriteFile(filepath.Join(root, "large-content.txt"), []byte(strings.Repeat("match "+strings.Repeat("x", 2000)+"\n", 50)), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	for name, result := range map[string]Result{
+		"list_directory": NewListDirectoryTool(root).Run(context.Background(), map[string]any{"recursive": false}),
+		"glob":           NewGlobTool(root).Run(context.Background(), map[string]any{"pattern": "*.txt", "limit": 1000}),
+		"grep files":     NewGrepTool(root).Run(context.Background(), map[string]any{"pattern": "match", "output_mode": "files_with_matches"}),
+		"grep content":   NewGrepTool(root).Run(context.Background(), map[string]any{"pattern": "match", "path": "large-content.txt", "head_limit": 50}),
+	} {
+		if !result.Truncated || len(result.Output) > searchOutputBudgetBytes {
+			t.Fatalf("direct %s output is not bounded: truncated=%t bytes=%d meta=%#v", name, result.Truncated, len(result.Output), result.Meta)
+		}
+	}
+}
+
 func TestRegistryLargeFileUsesSemanticFilePolicy(t *testing.T) {
 	setTestTempDir(t)
 	root := t.TempDir()
diff --git a/internal/tools/output_budget.go b/internal/tools/output_budget.go
index fc5ca745f..f270539a4 100644
--- a/internal/tools/output_budget.go
+++ b/internal/tools/output_budget.go
@@ -64,8 +64,11 @@ type outputPolicyProvider interface {
 // overestimating multilingual text and emoji rather than letting them bypass a
 // budget. Existing hard byte ceilings remain the final safety limit.
 func estimateOutputTokens(value string) int {
-	asciiNonSpace := 0
-	nonASCIIBytes := 0
+	asciiNonSpace, nonASCIIBytes := outputTokenComponents(value)
+	return (asciiNonSpace+3)/4 + nonASCIIBytes
+}
+
+func outputTokenComponents(value string) (asciiNonSpace int, nonASCIIBytes int) {
 	for index := 0; index < len(value); {
 		r, size := utf8.DecodeRuneInString(value[index:])
 		if r == utf8.RuneError && size == 1 {
@@ -75,7 +78,7 @@ func estimateOutputTokens(value string) int {
 			index++
 			continue
 		}
-		if r <= utf8.RuneSelf {
+		if r < utf8.RuneSelf {
 			switch r {
 			case ' ', '\t', '\n', '\r', '\f', '\v':
 			default:
@@ -86,7 +89,7 @@ func estimateOutputTokens(value string) int {
 		}
 		index += size
 	}
-	return (asciiNonSpace+3)/4 + nonASCIIBytes
+	return asciiNonSpace, nonASCIIBytes
 }
 
 const defaultSemanticTruncationNotice = "\n[zero] output truncated\n"
@@ -118,7 +121,10 @@ func budgetDefaultOutput(output string, budget outputBudget) budgetedOutput {
 	// estimate and the hard byte ceiling. fitsOutputBudget is monotonic as this
 	// window grows, so binary search avoids repeatedly trimming one rune at a time.
 	low, high := 0, maxContentBytes
-	best := defaultSemanticTruncationNotice
+	best := ""
+	if fitsOutputBudget(defaultSemanticTruncationNotice, budget) {
+		best = defaultSemanticTruncationNotice
+	}
 	for low <= high {
 		window := low + (high-low)/2
 		candidate := defaultHeadTail(output, window)
diff --git a/internal/tools/output_budget_test.go b/internal/tools/output_budget_test.go
index 845a97fdb..dd2162cba 100644
--- a/internal/tools/output_budget_test.go
+++ b/internal/tools/output_budget_test.go
@@ -17,6 +17,9 @@ func TestEstimateOutputTokensASCIIAndUnicode(t *testing.T) {
 	if first, second := estimateOutputTokens(unicodeText), estimateOutputTokens(unicodeText); first != second {
 		t.Fatalf("estimator is not deterministic: %d != %d", first, second)
 	}
+	if input := strings.Repeat("\u0080", 4); estimateOutputTokens(input) < len([]byte(input)) {
+		t.Fatalf("U+0080 estimate = %d, want conservative estimate >= %d", estimateOutputTokens(input), len([]byte(input)))
+	}
 }
 
 func TestBudgetDefaultOutputLeavesSmallOutputByteIdentical(t *testing.T) {
@@ -72,3 +75,16 @@ func TestBudgetDefaultOutputDeterministic(t *testing.T) {
 		}
 	}
 }
+
+func TestBudgetDefaultOutputTinyBudgetsNeverExceedTheirCeilings(t *testing.T) {
+	input := strings.Repeat("oversized output ", 100)
+	for _, budget := range []outputBudget{
+		{hardMaxBytes: len(defaultSemanticTruncationNotice) - 1},
+		{maxEstimatedTokens: estimateOutputTokens(defaultSemanticTruncationNotice) - 1},
+	} {
+		got := budgetDefaultOutput(input, budget)
+		if !got.truncated || !fitsOutputBudget(got.text, budget) {
+			t.Fatalf("tiny budget result does not fit: budget=%#v result=%#v", budget, got)
+		}
+	}
+}
diff --git a/internal/tools/output_policies.go b/internal/tools/output_policies.go
index 646112a27..b925c959f 100644
--- a/internal/tools/output_policies.go
+++ b/internal/tools/output_policies.go
@@ -241,20 +241,91 @@ func retainPrioritizedLines(lines []string, priorities []int, budget outputBudge
 
 func retainPrioritizedUnits(units []diffUnit, priorities []int, budget outputBudget) string {
 	selected := map[int]bool{}
-	best := ""
+	indexes := make([]int, 0, len(priorities))
+	cost := retainedUnitCost{}
 	for _, index := range priorities {
 		if index < 0 || index >= len(units) || selected[index] {
 			continue
 		}
-		selected[index] = true
-		candidate := renderSelectedUnits(units, selected)
-		if !fitsOutputBudget(candidate, budget) {
-			delete(selected, index)
+		position := sort.SearchInts(indexes, index)
+		previous, next := -1, len(units)
+		if position > 0 {
+			previous = indexes[position-1]
+		}
+		if position < len(indexes) {
+			next = indexes[position]
+		}
+
+		candidate := cost
+		candidate.add(units[index].text)
+		if len(indexes) == 0 {
+			candidate.addOmission(index)
+			candidate.addOmission(len(units) - index - 1)
+		} else {
+			candidate.removeOmission(next - previous - 1)
+			candidate.addOmission(index - previous - 1)
+			candidate.addOmission(next - index - 1)
+		}
+		if !candidate.fits(budget) {
 			continue
 		}
-		best = candidate
+		selected[index] = true
+		indexes = append(indexes, 0)
+		copy(indexes[position+1:], indexes[position:])
+		indexes[position] = index
+		cost = candidate
+	}
+	return renderSelectedUnits(units, selected)
+}
+
+// retainedUnitCost tracks the exact rendered size of selected units without
+// repeatedly rebuilding the full candidate text. Newlines between rendered
+// parts add bytes but no estimated tokens, so the token components remain
+// additive even as priorities select units out of source order.
+type retainedUnitCost struct {
+	textBytes     int
+	asciiNonSpace int
+	nonASCIIBytes int
+	parts         int
+}
+
+func (cost *retainedUnitCost) add(text string) {
+	ascii, nonASCII := outputTokenComponents(text)
+	cost.textBytes += len(text)
+	cost.asciiNonSpace += ascii
+	cost.nonASCIIBytes += nonASCII
+	cost.parts++
+}
+
+func (cost *retainedUnitCost) remove(text string) {
+	ascii, nonASCII := outputTokenComponents(text)
+	cost.textBytes -= len(text)
+	cost.asciiNonSpace -= ascii
+	cost.nonASCIIBytes -= nonASCII
+	cost.parts--
+}
+
+func (cost *retainedUnitCost) addOmission(count int) {
+	if count > 0 {
+		cost.add(omittedSectionsMarker(count))
 	}
-	return best
+}
+
+func (cost *retainedUnitCost) removeOmission(count int) {
+	if count > 0 {
+		cost.remove(omittedSectionsMarker(count))
+	}
+}
+
+func (cost retainedUnitCost) fits(budget outputBudget) bool {
+	bytes := cost.textBytes + max(0, cost.parts-1)
+	tokens := (cost.asciiNonSpace+3)/4 + cost.nonASCIIBytes
+	return (budget.hardMaxBytes <= 0 || bytes <= budget.hardMaxBytes) &&
+		(budget.maxEstimatedTokens <= 0 || tokens <= budget.maxEstimatedTokens)
+}
+
+func omittedSectionsMarker(count int) string {
+	return fmt.Sprintf("[zero] ... %d section(s) omitted ...", count)
 }
 
 func renderSelectedUnits(units []diffUnit, selected map[int]bool) string {
@@ -271,15 +342,15 @@ func renderSelectedUnits(units []diffUnit, selected map[int]bool) string {
 	for _, index := range indexes {
 		if previous >= 0 && index != previous+1 {
 			omitted := index - previous - 1
-			parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", omitted))
+			parts = append(parts, omittedSectionsMarker(omitted))
 		} else if previous < 0 && index > 0 {
-			parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", index))
+			parts = append(parts, omittedSectionsMarker(index))
 		}
 		parts = append(parts, units[index].text)
 		previous = index
 	}
 	if previous < len(units)-1 {
-		parts = append(parts, fmt.Sprintf("[zero] ... %d section(s) omitted ...", len(units)-previous-1))
+		parts = append(parts, omittedSectionsMarker(len(units)-previous-1))
 	}
 	return strings.Join(parts, "\n")
 }
diff --git a/internal/tools/read_file.go b/internal/tools/read_file.go
index 8c8787096..dad4b7f49 100644
--- a/internal/tools/read_file.go
+++ b/internal/tools/read_file.go
@@ -92,14 +92,14 @@ func (tool readFileTool) run(args map[string]any, options RunOptions, directBudg
 	// not the authoritative content hash.
 	options.FileTracker.RecordHash(absolutePath, stats.hash, stats.info)
 
-	result := renderReadFileRange(absolutePath, relativePath, stats.lines, startLine, endLine, maxLines)
+	maxBytes := 0
 	if directBudget {
-		return applyLegacyByteBudgetToResult(result, readOutputBudgetBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+		maxBytes = readOutputBudgetBytes
 	}
-	return result
+	return renderReadFileRange(absolutePath, relativePath, stats.lines, startLine, endLine, maxLines, maxBytes)
 }
 
-func renderReadFileRange(absolutePath string, relativePath string, total int, startLine int, endLine int, maxLines int) Result {
+func renderReadFileRange(absolutePath string, relativePath string, total int, startLine int, endLine int, maxLines int, maxBytes int) Result {
 	if startLine > total {
 		return okResult(fmt.Sprintf("File: %s\n(start_line %d is past the end of the file, which has %d lines)", relativePath, startLine, total))
 	}
@@ -127,7 +127,7 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 	// The shared registry boundary applies the file policy after redaction. Build
 	// the requested range here without a second byte-prefix truncation so that
 	// policy can retain both its beginning and end.
-	budgetedOutput := newOutputBudgetBuilder(0, "")
+	budgetedOutput := newOutputBudgetBuilder(maxBytes, "use start_line/end_line or max_lines to continue with a smaller range")
 	budgetedOutput.WriteString(header)
 	budgetedOutput.WriteString("\n\n")
 	if err := appendReadFileRange(budgetedOutput, absolutePath, startLine, selectedLines, width); err != nil {
@@ -142,14 +142,23 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 
 	budgeted := budgetedOutput.Result()
 	meta := map[string]string{}
-	if truncated {
+	if maxBytes > 0 {
+		for key, value := range outputBudgetMeta(budgeted) {
+			meta[key] = value
+		}
+	}
+	if truncated || budgeted.Truncated {
 		meta["truncated"] = "true"
-		meta["truncation_reason"] = "max_lines"
+		if budgeted.Truncated {
+			meta["truncation_reason"] = "byte_budget"
+		} else {
+			meta["truncation_reason"] = "max_lines"
+		}
 	}
 	return Result{
 		Status:    StatusOK,
 		Output:    budgeted.Output,
-		Truncated: truncated,
+		Truncated: truncated || budgeted.Truncated,
 		Meta:      meta,
 	}
 }

From c90b984aecfc89a2aae9dd5e8206434bd91ac5e3 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 21:56:36 +0530
Subject: [PATCH 10/15] test(output): make hook budgeting tests portable

---
 .../agent/output_budget_propagation_test.go   | 57 ++++++++++++-------
 1 file changed, 35 insertions(+), 22 deletions(-)

diff --git a/internal/agent/output_budget_propagation_test.go b/internal/agent/output_budget_propagation_test.go
index f02ad2795..b43071c0f 100644
--- a/internal/agent/output_budget_propagation_test.go
+++ b/internal/agent/output_budget_propagation_test.go
@@ -2,6 +2,7 @@ package agent
 
 import (
 	"context"
+	"os"
 	"strconv"
 	"strings"
 	"testing"
@@ -16,6 +17,38 @@ type propagationOutputTool struct {
 	output string
 }
 
+func TestOutputBudgetHookHelperProcess(t *testing.T) {
+	for index, arg := range os.Args {
+		if arg != "--zero-output-budget-hook" || index+1 >= len(os.Args) {
+			continue
+		}
+		if _, err := os.Stdout.WriteString(os.Args[index+1]); err != nil {
+			os.Exit(2)
+		}
+		os.Exit(0)
+	}
+}
+
+func largeOutputBudgetHookDispatcher() *hooks.Dispatcher {
+	feedback := strings.Repeat("hook feedback ", 200)
+	return hooks.NewDispatcher(hooks.DispatcherOptions{Config: hooks.Config{
+		Enabled: true,
+		Hooks: []hooks.Definition{{
+			ID:      "large-feedback",
+			Event:   hooks.EventAfterTool,
+			Matcher: "propagation_output",
+			Command: os.Args[0],
+			Args: []string{
+				"-test.run=TestOutputBudgetHookHelperProcess",
+				"--",
+				"--zero-output-budget-hook",
+				feedback,
+			},
+			Enabled: true,
+		}},
+	}})
+}
+
 func (tool propagationOutputTool) Name() string        { return "propagation_output" }
 func (tool propagationOutputTool) Description() string { return "returns output for propagation tests" }
 func (tool propagationOutputTool) Parameters() tools.Schema {
@@ -82,17 +115,7 @@ func TestExecuteToolCallRebudgetsOversizedAfterToolFeedback(t *testing.T) {
 	t.Setenv("ZERO_TOOL_OUTPUT_CEILING_TOKENS", "80")
 	registry := tools.NewRegistry()
 	registry.Register(propagationOutputTool{output: "tool output"})
-	dispatcher := hooks.NewDispatcher(hooks.DispatcherOptions{Config: hooks.Config{
-		Enabled: true,
-		Hooks: []hooks.Definition{{
-			ID:      "large-feedback",
-			Event:   hooks.EventAfterTool,
-			Matcher: "propagation_output",
-			Command: "echo",
-			Args:    []string{strings.Repeat("hook feedback ", 200)},
-			Enabled: true,
-		}},
-	}})
+	dispatcher := largeOutputBudgetHookDispatcher()
 
 	result, abortErr := executeToolCall(context.Background(), registry, ToolCall{
 		ID:        "call-hook-budget",
@@ -114,17 +137,7 @@ func TestRunTraceReflectsPostHookBudget(t *testing.T) {
 	t.Setenv("ZERO_TOOL_OUTPUT_CEILING_TOKENS", "80")
 	registry := tools.NewRegistry()
 	registry.Register(propagationOutputTool{output: "tool output"})
-	dispatcher := hooks.NewDispatcher(hooks.DispatcherOptions{Config: hooks.Config{
-		Enabled: true,
-		Hooks: []hooks.Definition{{
-			ID:      "large-feedback",
-			Event:   hooks.EventAfterTool,
-			Matcher: "propagation_output",
-			Command: "echo",
-			Args:    []string{strings.Repeat("hook feedback ", 200)},
-			Enabled: true,
-		}},
-	}})
+	dispatcher := largeOutputBudgetHookDispatcher()
 	provider := &mockProvider{turns: [][]zeroruntime.StreamEvent{
 		{
 			{Type: zeroruntime.StreamEventToolCallStart, ToolCallID: "call-hook-trace", ToolName: "propagation_output"},

From b9e811e5d9e9ce581b0139c95baa4b797f7c0a1f Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 22:44:45 +0530
Subject: [PATCH 11/15] fix(output): retain oversized single-line file content

---
 internal/tools/output_boundary.go      |  7 ++--
 internal/tools/output_boundary_test.go | 45 ++++++++++++++++++++++++
 internal/tools/output_policies.go      | 48 ++++++++++++++++++++------
 internal/tools/output_policies_test.go | 16 +++++++++
 4 files changed, 103 insertions(+), 13 deletions(-)

diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index d88d6b0d3..a7f1b71ea 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -172,9 +172,10 @@ func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[
 		if _, exists := meta["raw_bytes"]; !exists {
 			meta["raw_bytes"] = strconv.Itoa(output.originalBytes)
 		}
-		if _, exists := meta["emitted_bytes"]; !exists {
-			meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
-		}
+		// This is the final, model-visible output after semantic budgeting. A
+		// tool may have reported its pre-budget emitted size, but retaining that
+		// value here would make the established field disagree with Output.
+		meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
 		if _, exists := meta["estimated_tokens"]; !exists {
 			meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
 		}
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index 884ccb8a6..a14244054 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -146,6 +146,51 @@ func TestRegistryLargeFileUsesSemanticFilePolicy(t *testing.T) {
 	}
 }
 
+func TestRegistryLargeSingleLineFileRetainsHeadAndTail(t *testing.T) {
+	setTestTempDir(t)
+	root := t.TempDir()
+	content := "HEAD_SINGLE_LINE_MARK" + strings.Repeat("x", readOutputBudgetBytes*2) + "TAIL_SINGLE_LINE_MARK"
+	if err := os.WriteFile(filepath.Join(root, "large.min.js"), []byte(content), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	registry := NewRegistry()
+	registry.Register(NewReadFileTool(root))
+	result := registry.Run(context.Background(), "read_file", map[string]any{"path": "large.min.js"})
+	if !result.Truncated || result.Meta[outputBudgetCategoryMeta] != string(outputCategoryFile) {
+		t.Fatalf("single-line file was not semantically budgeted: truncated=%t meta=%#v", result.Truncated, result.Meta)
+	}
+	if len(result.Output) > readOutputBudgetBytes || !utf8.ValidString(result.Output) {
+		t.Fatalf("single-line file output is not safely bounded: bytes=%d valid=%t", len(result.Output), utf8.ValidString(result.Output))
+	}
+	for _, want := range []string{"File: large.min.js", "HEAD_SINGLE_LINE_MARK", "TAIL_SINGLE_LINE_MARK"} {
+		if !strings.Contains(result.Output, want) {
+			t.Fatalf("single-line file output missing %q", want)
+		}
+	}
+}
+
+func TestRegistryMinifiedFileUpdatesEmittedBytesAfterBudgeting(t *testing.T) {
+	setTestTempDir(t)
+	root := t.TempDir()
+	content := "HEAD_MINIFIED_MARK" + strings.Repeat("x", readOutputBudgetBytes*2) + "TAIL_MINIFIED_MARK"
+	if err := os.WriteFile(filepath.Join(root, "large.txt"), []byte(content), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	registry := NewRegistry()
+	registry.Register(NewReadMinifiedFileTool(root))
+	result := registry.Run(context.Background(), "read_minified_file", map[string]any{"path": "large.txt"})
+	if !result.Truncated || result.Meta["emitted_bytes"] != strconv.Itoa(len(result.Output)) {
+		t.Fatalf("minified metadata does not describe final output: truncated=%t emitted=%q bytes=%d", result.Truncated, result.Meta["emitted_bytes"], len(result.Output))
+	}
+	for _, want := range []string{"HEAD_MINIFIED_MARK", "TAIL_MINIFIED_MARK"} {
+		if !strings.Contains(result.Output, want) {
+			t.Fatalf("minified single-line file output missing %q", want)
+		}
+	}
+}
+
 func TestRegistryGrepUsesSemanticMultiFileCoverage(t *testing.T) {
 	setTestTempDir(t)
 	root := t.TempDir()
diff --git a/internal/tools/output_policies.go b/internal/tools/output_policies.go
index b925c959f..342eaeba8 100644
--- a/internal/tools/output_policies.go
+++ b/internal/tools/output_policies.go
@@ -83,7 +83,18 @@ func budgetFileLines(output string, budget outputBudget) string {
 			priorities = append(priorities, right)
 		}
 	}
-	return retainPrioritizedLines(lines, priorities, budget)
+	units := lineDiffUnits(lines)
+	selected := selectPrioritizedUnits(units, priorities, budget)
+	for index := range selected {
+		// Index zero is the file/range header. If no non-blank requested
+		// content line fits as a complete line, let the common caller fall
+		// back to its UTF-8-safe head/tail policy rather than returning only
+		// a header and omission marker for a minified single-line file.
+		if index > 0 && strings.TrimSpace(lines[index]) != "" {
+			return renderSelectedUnits(units, selected)
+		}
+	}
+	return ""
 }
 
 func budgetSearchLines(output string, budget outputBudget) string {
@@ -232,14 +243,22 @@ func splitDiffUnits(output string) []diffUnit {
 }
 
 func retainPrioritizedLines(lines []string, priorities []int, budget outputBudget) string {
+	return retainPrioritizedUnits(lineDiffUnits(lines), priorities, budget)
+}
+
+func lineDiffUnits(lines []string) []diffUnit {
 	units := make([]diffUnit, 0, len(lines))
 	for index, line := range lines {
 		units = append(units, diffUnit{order: index, text: line})
 	}
-	return retainPrioritizedUnits(units, priorities, budget)
+	return units
 }
 
 func retainPrioritizedUnits(units []diffUnit, priorities []int, budget outputBudget) string {
+	return renderSelectedUnits(units, selectPrioritizedUnits(units, priorities, budget))
+}
+
+func selectPrioritizedUnits(units []diffUnit, priorities []int, budget outputBudget) map[int]bool {
 	selected := map[int]bool{}
 	indexes := make([]int, 0, len(priorities))
 	cost := retainedUnitCost{}
@@ -275,7 +294,7 @@ func retainPrioritizedUnits(units []diffUnit, priorities []int, budget outputBud
 		indexes[position] = index
 		cost = candidate
 	}
-	return renderSelectedUnits(units, selected)
+	return selected
 }
 
 // retainedUnitCost tracks the exact rendered size of selected units without
@@ -379,14 +398,23 @@ func collapseConsecutiveDuplicateLines(lines []string) []string {
 }
 
 func searchResultFile(line string) string {
-	parts := strings.SplitN(line, ":", 3)
-	if len(parts) < 3 {
-		return ""
-	}
-	if _, err := strconv.Atoi(parts[1]); err != nil {
-		return ""
+	// Search output is path:line: text. Locate the numeric line field from
+	// the right so a Windows drive prefix (C:) remains part of the path.
+	for end := len(line); end > 0; {
+		lineEnd := strings.LastIndex(line[:end], ":")
+		if lineEnd < 0 {
+			return ""
+		}
+		lineStart := strings.LastIndex(line[:lineEnd], ":")
+		if lineStart < 0 {
+			return ""
+		}
+		if _, err := strconv.Atoi(line[lineStart+1 : lineEnd]); err == nil {
+			return strings.TrimSpace(line[:lineStart])
+		}
+		end = lineStart
 	}
-	return strings.TrimSpace(parts[0])
+	return ""
 }
 
 func isTestFailureLine(line string) bool {
diff --git a/internal/tools/output_policies_test.go b/internal/tools/output_policies_test.go
index 1de407a66..fbf828d72 100644
--- a/internal/tools/output_policies_test.go
+++ b/internal/tools/output_policies_test.go
@@ -42,6 +42,22 @@ func TestSearchOutputPolicyPreservesMultiFileCoverage(t *testing.T) {
 	}
 }
 
+func TestSearchOutputPolicyPreservesWindowsPathCoverage(t *testing.T) {
+	var lines []string
+	for _, file := range []string{"a.go", "b.go", "c.go", "d.go"} {
+		for line := 1; line <= 30; line++ {
+			lines = append(lines, fmt.Sprintf(`C:\workspace\%s:%d: match value %d`, file, line, line))
+		}
+	}
+	lines = append(lines, "120 matches found")
+	got := budgetSemanticOutput(strings.Join(lines, "\n"), outputCategorySearch, semanticTestBudget())
+	for _, want := range []string{`C:\workspace\a.go:`, `C:\workspace\b.go:`, `C:\workspace\c.go:`, `C:\workspace\d.go:`, "120 matches"} {
+		if !strings.Contains(got.text, want) {
+			t.Fatalf("search policy missing %q:\n%s", want, got.text)
+		}
+	}
+}
+
 func TestProcessOutputPolicyCollapsesRepetitiveLogsAndKeepsDiagnostics(t *testing.T) {
 	input := "starting server\n" + strings.Repeat("polling...\n", 300) + "WARNING: queue slow\nERROR: request failed\nshutdown complete"
 	got := budgetSemanticOutput(input, outputCategoryProcess, semanticTestBudget())

From ea27648d0ddb6309bc7d6393d64aaf2de24bbfa5 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 22:58:01 +0530
Subject: [PATCH 12/15] fix(output): apply semantic budgets to captured output

---
 internal/tools/bash.go                 | 36 ++++++++++--
 internal/tools/bash_budget_test.go     | 12 ++++
 internal/tools/exec_command.go         | 24 ++++++--
 internal/tools/output_boundary.go      | 49 +++++++++++++++++
 internal/tools/output_boundary_test.go | 76 +++++++++++++++++++++++---
 internal/tools/output_budget.go        | 27 ++++++++-
 internal/tools/output_ceiling.go       | 17 +++---
 internal/tools/read_file.go            | 16 ++++--
 internal/tools/registry.go             |  8 +--
 9 files changed, 229 insertions(+), 36 deletions(-)

diff --git a/internal/tools/bash.go b/internal/tools/bash.go
index 90b36bc0a..218a30014 100644
--- a/internal/tools/bash.go
+++ b/internal/tools/bash.go
@@ -71,14 +71,18 @@ func NewScopedBashTool(workspaceRoot string, scope PathScope) Tool {
 }
 
 func (tool bashTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.run(ctx, args, nil)
+	return tool.run(ctx, args, nil, true)
 }
 
 func (tool bashTool) RunWithSandbox(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine) Result {
-	return tool.run(ctx, args, engine)
+	return tool.run(ctx, args, engine, true)
 }
 
-func (tool bashTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine) Result {
+func (tool bashTool) RunWithOptions(ctx context.Context, args map[string]any, options RunOptions) Result {
+	return tool.run(ctx, args, options.Sandbox, false)
+}
+
+func (tool bashTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine, directBudget bool) Result {
 	commandText, err := aliasedStringArg(args, []string{"command", "cmd", "script", "shell"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for bash: " + err.Error())
@@ -180,7 +184,7 @@ func (tool bashTool) run(ctx context.Context, args map[string]any, engine *zeroS
 			}
 		}
 		markLikelySandboxDenial(meta, plan, exitCode, stdoutText, stderrText)
-		outText, errText, truncated := budgetBashCapture(stdoutText, stdout.total, stderrText, stderrTotal, meta)
+		outText, errText, truncated := prepareBashOutput(stdoutText, stdout.total, stderrText, stderrTotal, meta, directBudget)
 		return Result{
 			Status:    StatusError,
 			Output:    formatBashOutputWithShellHint(outText, errText, exitCode, meta),
@@ -190,7 +194,7 @@ func (tool bashTool) run(ctx context.Context, args map[string]any, engine *zeroS
 	}
 
 	markLikelySandboxDenial(meta, plan, exitCode, stdoutText, stderrText)
-	outText, errText, truncated := budgetBashCapture(stdoutText, stdout.total, stderrText, stderrTotal, meta)
+	outText, errText, truncated := prepareBashOutput(stdoutText, stdout.total, stderrText, stderrTotal, meta, directBudget)
 	if meta[SandboxLikelyDeniedMeta] == "true" {
 		return Result{
 			Status:    StatusError,
@@ -423,6 +427,28 @@ func budgetBashOutput(stdout string, stderr string, meta map[string]string) (str
 	return budgetBashCapture(stdout, len(stdout), stderr, len(stderr), meta)
 }
 
+// prepareBashOutput keeps direct callers on the established positional budget.
+// Registry calls retain the existing bounded capture but leave final semantic
+// reduction and spill creation to the post-redaction registry boundary.
+func prepareBashOutput(out string, outTotal int, errStr string, errTotal int, meta map[string]string, directBudget bool) (string, string, bool) {
+	if directBudget {
+		return budgetBashCapture(out, outTotal, errStr, errTotal, meta)
+	}
+	outText := sectionWithCaptureGap(out, outTotal)
+	errText := sectionWithCaptureGap(errStr, errTotal)
+	truncated := outTotal > len(out) || errTotal > len(errStr)
+	if meta != nil {
+		meta["raw_bytes"] = strconv.Itoa(outTotal + errTotal)
+		meta["emitted_bytes"] = strconv.Itoa(len(outText) + len(errText))
+		meta["estimated_tokens"] = strconv.Itoa(estimatedTokensFromBytes(len(outText) + len(errText)))
+		if truncated {
+			meta["truncated"] = "true"
+			meta["truncation_reason"] = "capture_budget"
+		}
+	}
+	return outText, errText, truncated
+}
+
 // budgetBashCapture is budgetBashOutput for the streaming-capture path: outTotal
 // and errTotal are the true byte counts (from boundedBuffer.total), which may
 // exceed the retained strings when the middle was dropped during capture. Meta's
diff --git a/internal/tools/bash_budget_test.go b/internal/tools/bash_budget_test.go
index 5c652212d..83d0cfad6 100644
--- a/internal/tools/bash_budget_test.go
+++ b/internal/tools/bash_budget_test.go
@@ -37,6 +37,18 @@ func TestBudgetBashOutputSmallPassesThrough(t *testing.T) {
 	}
 }
 
+func TestPrepareBashOutputDefersRegistrySemanticBudget(t *testing.T) {
+	output := "START\n" + strings.Repeat("progress\n", 8_000) + "ERROR: retained\nEND"
+	registryOutput, _, registryTruncated := prepareBashOutput(output, len(output), "", 0, map[string]string{}, false)
+	if registryTruncated || registryOutput != output {
+		t.Fatalf("registry preparation must preserve capture-bounded output for semantic reduction: truncated=%t bytes=%d", registryTruncated, len(registryOutput))
+	}
+	directOutput, _, directTruncated := prepareBashOutput(output, len(output), "", 0, map[string]string{}, true)
+	if !directTruncated || len(directOutput) > bashOutputBudgetBytes+512 {
+		t.Fatalf("direct path must preserve legacy positional budget: truncated=%t bytes=%d", directTruncated, len(directOutput))
+	}
+}
+
 // Oversized stdout is truncated head+tail: both the first and last lines survive,
 // the middle is dropped behind a marker, meta is flagged, and the captured text
 // is spilled to a re-readable file.
diff --git a/internal/tools/exec_command.go b/internal/tools/exec_command.go
index 4a7191a86..a30fb1b9f 100644
--- a/internal/tools/exec_command.go
+++ b/internal/tools/exec_command.go
@@ -483,11 +483,15 @@ func NewScopedExecCommandTool(workspaceRoot string, scope PathScope, manager *ex
 }
 
 func (tool execCommandTool) Run(ctx context.Context, args map[string]any) Result {
-	return tool.run(ctx, args, nil)
+	return tool.run(ctx, args, nil, true)
 }
 
 func (tool execCommandTool) RunWithSandbox(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine) Result {
-	return tool.run(ctx, args, engine)
+	return tool.run(ctx, args, engine, true)
+}
+
+func (tool execCommandTool) RunWithOptions(ctx context.Context, args map[string]any, options RunOptions) Result {
+	return tool.run(ctx, args, options.Sandbox, false)
 }
 
 func (tool execCommandTool) ExecSessions() []ExecSessionSnapshot {
@@ -502,7 +506,7 @@ func (tool execCommandTool) StopAllExecSessions() []int {
 	return tool.manager.stopAll()
 }
 
-func (tool execCommandTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine) Result {
+func (tool execCommandTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine, directBudget bool) Result {
 	commandText, err := aliasedStringArg(args, []string{"cmd", "command", "script", "shell"}, "", true, false)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for exec_command: " + err.Error())
@@ -558,7 +562,7 @@ func (tool execCommandTool) run(ctx context.Context, args map[string]any, engine
 	if exited {
 		tool.manager.remove(session.id)
 	}
-	return execToolResult(execToolResultInput{
+	return execToolResultWithBudget(execToolResultInput{
 		commandText:           commandText,
 		output:                output,
 		outputBufferTruncated: outputTruncated,
@@ -569,7 +573,7 @@ func (tool execCommandTool) run(ctx context.Context, args map[string]any, engine
 		tty:                   session.tty,
 		plan:                  session.plan,
 		maxOutputTokens:       maxOutputTokens,
-	})
+	}, directBudget)
 }
 
 func (tool execCommandTool) startSession(commandText string, absoluteCwd string, relativeCwd string, ttyRequested bool, engine *zeroSandbox.Engine, sandboxPermissions SandboxPermissionOverride) (*execSession, error) {
@@ -855,7 +859,15 @@ type execToolResultInput struct {
 }
 
 func execToolResult(input execToolResultInput) Result {
-	output, truncated := truncateExecOutput(input.output, input.maxOutputTokens)
+	return execToolResultWithBudget(input, true)
+}
+
+func execToolResultWithBudget(input execToolResultInput, directBudget bool) Result {
+	output := input.output
+	truncated := false
+	if directBudget {
+		output, truncated = truncateExecOutput(input.output, input.maxOutputTokens)
+	}
 	meta := map[string]string{
 		"cwd": input.relativeCwd,
 		"tty": strconv.FormatBool(input.tty),
diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index a7f1b71ea..f181475a9 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -34,6 +34,50 @@ func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any,
 	return result
 }
 
+// applySelfManagedOutputBudget applies semantic retention to tools that retain
+// output with their own capture-aware limits. Their explicit budgets remain
+// authoritative, rather than being replaced by the registry default ceiling.
+func applySelfManagedOutputBudget(tool Tool, toolName string, args map[string]any, result Result) Result {
+	budget := selfManagedOutputBudget(toolName, args)
+	if budget.maxEstimatedTokens <= 0 && budget.hardMaxBytes <= 0 {
+		return annotateSelfBudgetedOutput(tool, toolName, args, result)
+	}
+
+	category := resolveOutputCategory(tool, toolName, args)
+	budgeted := budgetSemanticOutput(result.Output, category, budget)
+	if result.Truncated && !budgeted.truncated {
+		budgeted.truncated = true
+		budgeted.reason = result.Meta["truncation_reason"]
+		if budgeted.reason == "" {
+			budgeted.reason = "upstream_tool_budget"
+		}
+	}
+	if budgeted.truncated {
+		budgeted = attachExistingSpill(toolName, result.Output, budget, budgeted)
+	}
+	result.Output = budgeted.text
+	result.Truncated = result.Truncated || budgeted.truncated
+	result.Meta = addOutputBudgetMetadata(result.Meta, budgeted)
+	return result
+}
+
+func selfManagedOutputBudget(toolName string, args map[string]any) outputBudget {
+	switch toolName {
+	case "bash":
+		// bash previously exposed at most 32 KiB from each stream. Keep that
+		// combined 64 KiB ceiling while selecting its contents semantically.
+		return outputBudget{maxEstimatedTokens: (bashOutputBudgetBytes * 2) / 4, hardMaxBytes: bashOutputBudgetBytes * 2}
+	case ExecCommandToolName:
+		maxOutputTokens := defaultMaxOutputTokens
+		if parsed, err := intArg(args, "max_output_tokens", defaultMaxOutputTokens, 1, maxExecOutputTokenRequest); err == nil {
+			maxOutputTokens = parsed
+		}
+		return outputBudget{maxEstimatedTokens: maxOutputTokens, hardMaxBytes: maxOutputTokens * 4}
+	default:
+		return outputBudget{}
+	}
+}
+
 // RebudgetAfterHook reapplies the registry's redaction and output limits after
 // an afterTool hook appends model-visible feedback to a completed result. The
 // initial registry pass has already run; this second pass is limited to the
@@ -150,6 +194,11 @@ func attachExistingSpill(toolName, output string, budget outputBudget, current b
 	base.text = text
 	base.retainedBytes = len(text)
 	base.estimatedRetainedTokens = estimateOutputTokens(text)
+	base.truncated = true
+	if base.reason == "" {
+		base.reason = current.reason
+	}
+	base.category = current.category
 	base.spillPath = path
 	return base
 }
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index a14244054..41e2d6abf 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -163,6 +163,9 @@ func TestRegistryLargeSingleLineFileRetainsHeadAndTail(t *testing.T) {
 	if len(result.Output) > readOutputBudgetBytes || !utf8.ValidString(result.Output) {
 		t.Fatalf("single-line file output is not safely bounded: bytes=%d valid=%t", len(result.Output), utf8.ValidString(result.Output))
 	}
+	if rawBytes, err := strconv.Atoi(result.Meta["raw_bytes"]); err != nil || rawBytes <= len(result.Output) {
+		t.Fatalf("single-line file capture was not bounded head/tail output: raw=%q emitted=%d", result.Meta["raw_bytes"], len(result.Output))
+	}
 	for _, want := range []string{"File: large.min.js", "HEAD_SINGLE_LINE_MARK", "TAIL_SINGLE_LINE_MARK"} {
 		if !strings.Contains(result.Output, want) {
 			t.Fatalf("single-line file output missing %q", want)
@@ -235,13 +238,72 @@ func TestShellOutputCategoryClassification(t *testing.T) {
 	}
 }
 
-func TestSelfBudgetedToolDeclaresSemanticCategoryWithoutRebudgeting(t *testing.T) {
+func TestSelfManagedOutputBudgetUsesSemanticTestPolicy(t *testing.T) {
+	setTestTempDir(t)
+	input := "stdout:\n" + strings.Repeat("PASS progress\n", 8_000) +
+		"--- FAIL: TestImportant (0.01s)\nthing_test.go:42: expected 7, got 9\nFAIL\nexit_code: 1"
+	tests := []struct {
+		name string
+		tool Tool
+		args map[string]any
+	}{
+		{name: "bash", tool: NewBashTool(t.TempDir()), args: map[string]any{"command": "go test ./..."}},
+		{name: "exec", tool: NewExecCommandTool(t.TempDir(), newExecSessionManager()), args: map[string]any{"cmd": "go test ./...", "max_output_tokens": 16_000}},
+	}
+	for _, test := range tests {
+		t.Run(test.name, func(t *testing.T) {
+			got := applySelfManagedOutputBudget(test.tool, test.tool.Name(), test.args, Result{Status: StatusError, Output: input, Meta: map[string]string{}})
+			if !got.Truncated || got.Meta[outputBudgetCategoryMeta] != string(outputCategoryTest) {
+				t.Fatalf("semantic budget was not applied: %#v", got)
+			}
+			for _, want := range []string{"TestImportant", "expected 7", "FAIL", "exit_code: 1"} {
+				if !strings.Contains(got.Output, want) {
+					t.Fatalf("semantic test output missing %q:\n%s", want, got.Output)
+				}
+			}
+		})
+	}
+}
+
+type semanticBashFakeTool struct{ ceilingFakeTool }
+
+func (semanticBashFakeTool) managesOutputBudget() {}
+
+func (semanticBashFakeTool) outputCategory(args map[string]any) outputCategory {
+	command, _ := args["command"].(string)
+	return shellOutputCategory(command)
+}
+
+func TestRegistryAppliesSemanticBudgetToSelfManagedShellOutput(t *testing.T) {
+	setTestTempDir(t)
+	input := "startup\n" + strings.Repeat("PASS progress\n", 8_000) +
+		"--- FAIL: TestRegistryImportant (0.01s)\nexpected 7, got 9\nFAIL\nexit_code: 1"
+	registry := NewRegistry()
+	registry.Register(semanticBashFakeTool{newCeilingFakeTool("bash", input)})
+	result := registry.Run(context.Background(), "bash", map[string]any{"command": "go test ./..."})
+	if !result.Truncated || result.Meta[outputBudgetReasonMeta] != "semantic_test_budget" {
+		t.Fatalf("registry did not apply semantic test budget: %#v", result.Meta)
+	}
+	for _, want := range []string{"TestRegistryImportant", "expected 7", "FAIL", "exit_code: 1"} {
+		if !strings.Contains(result.Output, want) {
+			t.Fatalf("registry semantic test output missing %q:\n%s", want, result.Output)
+		}
+	}
+}
+
+func TestRegistryAppliesSemanticBudgetToSelfManagedProcessOutput(t *testing.T) {
+	setTestTempDir(t)
+	input := "starting build\n" + strings.Repeat("progress\n", 8_000) +
+		"WARNING: cache is cold\nERROR: compilation failed\nexit_code: 1"
 	registry := NewRegistry()
-	registry.Register(NewBashTool(t.TempDir()))
-	tool, _ := registry.Get("bash")
-	result := Result{Status: StatusOK, Output: "already bounded", Meta: map[string]string{}}
-	got := annotateSelfBudgetedOutput(tool, "bash", map[string]any{"command": "go test ./..."}, result)
-	if got.Output != result.Output || got.Meta[outputBudgetCategoryMeta] != string(outputCategoryTest) {
-		t.Fatalf("self-budgeted category annotation changed output or lost category: %#v", got)
+	registry.Register(semanticBashFakeTool{newCeilingFakeTool("bash", input)})
+	result := registry.Run(context.Background(), "bash", map[string]any{"command": "make build"})
+	if !result.Truncated || result.Meta[outputBudgetReasonMeta] != "semantic_process_budget" {
+		t.Fatalf("registry did not apply semantic process budget: %#v", result.Meta)
+	}
+	for _, want := range []string{"starting build", "WARNING", "ERROR", "exit_code: 1"} {
+		if !strings.Contains(result.Output, want) {
+			t.Fatalf("registry semantic process output missing %q:\n%s", want, result.Output)
+		}
 	}
 }
diff --git a/internal/tools/output_budget.go b/internal/tools/output_budget.go
index f270539a4..a77b6c9e1 100644
--- a/internal/tools/output_budget.go
+++ b/internal/tools/output_budget.go
@@ -218,6 +218,7 @@ func estimatedTokensFromBytes(bytes int) int {
 
 type outputBudgetBuilder struct {
 	builder  strings.Builder
+	capture  *boundedBuffer
 	rawBytes int
 	maxBytes int
 	hint     string
@@ -227,8 +228,24 @@ func newOutputBudgetBuilder(maxBytes int, hint string) *outputBudgetBuilder {
 	return &outputBudgetBuilder{maxBytes: maxBytes, hint: hint}
 }
 
+// newHeadTailOutputBudgetBuilder bounds capture while retaining both ends of
+// an input for a later semantic policy. It is used for registry-driven file
+// reads; direct Tool.Run calls keep the legacy prefix-only builder above.
+func newHeadTailOutputBudgetBuilder(maxBytes int, hint string) *outputBudgetBuilder {
+	headBytes := maxBytes / 2
+	return &outputBudgetBuilder{
+		capture:  newBoundedBuffer(headBytes, maxBytes-headBytes),
+		maxBytes: maxBytes,
+		hint:     hint,
+	}
+}
+
 func (builder *outputBudgetBuilder) WriteString(value string) {
 	builder.rawBytes += len(value)
+	if builder.capture != nil {
+		_, _ = builder.capture.Write([]byte(value))
+		return
+	}
 	if builder.maxBytes <= 0 {
 		builder.builder.WriteString(value)
 		return
@@ -262,6 +279,9 @@ func applyLegacyByteBudgetToResult(result Result, maxBytes int, hint string) Res
 
 func (builder *outputBudgetBuilder) Result() outputBudgetResult {
 	output := builder.builder.String()
+	if builder.capture != nil {
+		output = builder.capture.retained()
+	}
 	result := outputBudgetResult{
 		Output:       output,
 		RawBytes:     builder.rawBytes,
@@ -276,7 +296,12 @@ func (builder *outputBudgetBuilder) Result() outputBudgetResult {
 	if budget < 0 {
 		budget = 0
 	}
-	result.Output = utf8Prefix(output, budget) + marker
+	if builder.capture != nil {
+		headBytes := budget / 2
+		result.Output = utf8Prefix(output, headBytes) + marker + utf8Suffix(output, budget-headBytes)
+	} else {
+		result.Output = utf8Prefix(output, budget) + marker
+	}
 	result.Truncated = true
 	result.EmittedBytes = len(result.Output)
 	return result
diff --git a/internal/tools/output_ceiling.go b/internal/tools/output_ceiling.go
index af6a7b8e0..973462e31 100644
--- a/internal/tools/output_ceiling.go
+++ b/internal/tools/output_ceiling.go
@@ -25,16 +25,17 @@ const defaultOutputCeilingTokens = 16_000
 // disables the ceiling entirely; unset or unparsable keeps the default.
 const outputCeilingEnv = "ZERO_TOOL_OUTPUT_CEILING_TOKENS"
 
-// selfBudgeting marks a tool that enforces its own deliberate output budget —
-// possibly model-raisable (exec_command) — which the registry ceiling must not
-// second-guess. The method is unexported on purpose: only tools in this
-// package can opt out, so an MCP-served tool can never exempt itself.
+// selfBudgeting marks a tool with a deliberate capture-aware output budget —
+// possibly model-raisable (exec_command). The registry applies semantic
+// retention within that explicit budget rather than replacing it with the
+// default ceiling. The method is unexported so an MCP-served tool cannot opt
+// into this path.
 type selfBudgeting interface{ managesOutputBudget() }
 
-// The exemption list, kept in one place. Shell/process tools retain their
-// established capture-aware budgets: bash (per-stream budget + spill) and
-// exec_command (model-raisable budget + spill). File/search tools now use the
-// shared post-redaction semantic boundary.
+// The list is kept in one place. Shell/process tools retain their established
+// capture-aware budgets: bash (per-stream bounded capture) and exec_command
+// (model-raisable bounded session output). File/search tools use the standard
+// shared post-redaction boundary.
 func (bashTool) managesOutputBudget()        {}
 func (execCommandTool) managesOutputBudget() {}
 
diff --git a/internal/tools/read_file.go b/internal/tools/read_file.go
index dad4b7f49..5391345c2 100644
--- a/internal/tools/read_file.go
+++ b/internal/tools/read_file.go
@@ -124,10 +124,16 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 		header = fmt.Sprintf("File: %s (lines %d-%d of %d)", relativePath, startLine, lastLine, total)
 	}
 
-	// The shared registry boundary applies the file policy after redaction. Build
-	// the requested range here without a second byte-prefix truncation so that
-	// policy can retain both its beginning and end.
-	budgetedOutput := newOutputBudgetBuilder(maxBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+	// The shared registry boundary applies the file policy after redaction. Its
+	// input still needs a bounded capture: retain the requested range's head and
+	// tail instead of materializing an arbitrarily large file in memory. Direct
+	// Tool.Run calls preserve the legacy prefix-only byte budget.
+	var budgetedOutput *outputBudgetBuilder
+	if maxBytes > 0 {
+		budgetedOutput = newOutputBudgetBuilder(maxBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+	} else {
+		budgetedOutput = newHeadTailOutputBudgetBuilder(readOutputBudgetBytes, "use start_line/end_line or max_lines to continue with a smaller range")
+	}
 	budgetedOutput.WriteString(header)
 	budgetedOutput.WriteString("\n\n")
 	if err := appendReadFileRange(budgetedOutput, absolutePath, startLine, selectedLines, width); err != nil {
@@ -142,7 +148,7 @@ func renderReadFileRange(absolutePath string, relativePath string, total int, st
 
 	budgeted := budgetedOutput.Result()
 	meta := map[string]string{}
-	if maxBytes > 0 {
+	if maxBytes > 0 || budgeted.Truncated {
 		for key, value := range outputBudgetMeta(budgeted) {
 			meta[key] = value
 		}
diff --git a/internal/tools/registry.go b/internal/tools/registry.go
index bd156786f..b114eecbd 100644
--- a/internal/tools/registry.go
+++ b/internal/tools/registry.go
@@ -126,13 +126,13 @@ func (registry *Registry) RunWithOptions(ctx context.Context, name string, args
 	// args/paths) are redacted at the boundary just like tool output. The output
 	// ceiling runs after the scrub so the transcript and the spill file agree on
 	// what was hidden.
-	ceilingExempt := false
+	selfManagedOutput := false
 	var tool Tool
 	var ok bool
 	defer func() {
 		result = scrubResultSecrets(result)
-		if ceilingExempt {
-			result = annotateSelfBudgetedOutput(tool, name, args, result)
+		if selfManagedOutput {
+			result = applySelfManagedOutputBudget(tool, name, args, result)
 		} else {
 			result = applyRegistryOutputBudget(tool, name, args, result)
 			result = enforceOutputCeiling(name, result)
@@ -144,7 +144,7 @@ func (registry *Registry) RunWithOptions(ctx context.Context, name string, args
 		return errorResult(`Error: Unknown tool "` + name + `".`)
 	}
 	if _, ok := tool.(selfBudgeting); ok {
-		ceilingExempt = true
+		selfManagedOutput = true
 	}
 	if rejecter, ok := tool.(PrePermissionRejecter); ok {
 		if res, rejected := rejecter.RejectBeforePermission(args); rejected {

From e93519e2d11bf4ffa70615ee8b5001dd258ff761 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 23:18:31 +0530
Subject: [PATCH 13/15] fix(output): preserve hook budgets and search paths

---
 internal/tools/output_boundary.go      |  6 ++++++
 internal/tools/output_boundary_test.go | 23 +++++++++++++++++++++++
 internal/tools/output_policies.go      | 23 +++++++++++++++--------
 internal/tools/output_policies_test.go | 16 ++++++++++++++++
 4 files changed, 60 insertions(+), 8 deletions(-)

diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index f181475a9..903e6cd2f 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -85,6 +85,12 @@ func selfManagedOutputBudget(toolName string, args map[string]any) outputBudget
 func (registry *Registry) RebudgetAfterHook(toolName string, args map[string]any, result Result) Result {
 	result = scrubResultSecrets(result)
 	tool, _ := registry.Get(toolName)
+	if _, ok := tool.(selfBudgeting); ok {
+		// Match the primary registry boundary: self-managed tools keep their
+		// call-specific capture/output budget instead of being tightened or
+		// loosened to the generic registry ceiling after hook feedback.
+		return applySelfManagedOutputBudget(tool, toolName, args, result)
+	}
 	result = applyRegistryOutputBudget(tool, toolName, args, result)
 	return enforceOutputCeiling(toolName, result)
 }
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index 41e2d6abf..47a4f43d7 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -307,3 +307,26 @@ func TestRegistryAppliesSemanticBudgetToSelfManagedProcessOutput(t *testing.T) {
 		}
 	}
 }
+
+func TestRebudgetAfterHookPreservesSelfManagedExecBudget(t *testing.T) {
+	setTestTempDir(t)
+	registry := NewRegistry()
+	registry.Register(NewExecCommandTool(t.TempDir(), newExecSessionManager()))
+
+	t.Run("tight call budget remains authoritative", func(t *testing.T) {
+		args := map[string]any{"cmd": "make build", "max_output_tokens": 10}
+		result := registry.RebudgetAfterHook(ExecCommandToolName, args, Result{Status: StatusOK, Output: strings.Repeat("x", 1_000)})
+		if !result.Truncated || len(result.Output) > 40 {
+			t.Fatalf("post-hook output escaped call budget: truncated=%t bytes=%d meta=%#v", result.Truncated, len(result.Output), result.Meta)
+		}
+	})
+
+	t.Run("raised call budget is not replaced by generic ceiling", func(t *testing.T) {
+		args := map[string]any{"cmd": "make build", "max_output_tokens": 20_000}
+		output := strings.Repeat("x", 70_000)
+		result := registry.RebudgetAfterHook(ExecCommandToolName, args, Result{Status: StatusOK, Output: output})
+		if result.Truncated || result.Output != output {
+			t.Fatalf("post-hook output was incorrectly limited by generic ceiling: truncated=%t bytes=%d", result.Truncated, len(result.Output))
+		}
+	})
+}
diff --git a/internal/tools/output_policies.go b/internal/tools/output_policies.go
index 342eaeba8..fef53f966 100644
--- a/internal/tools/output_policies.go
+++ b/internal/tools/output_policies.go
@@ -398,21 +398,28 @@ func collapseConsecutiveDuplicateLines(lines []string) []string {
 }
 
 func searchResultFile(line string) string {
-	// Search output is path:line: text. Locate the numeric line field from
-	// the right so a Windows drive prefix (C:) remains part of the path.
-	for end := len(line); end > 0; {
-		lineEnd := strings.LastIndex(line[:end], ":")
-		if lineEnd < 0 {
+	// Search output is path:line: text. Locate the first numeric field from
+	// the left after an optional Windows drive prefix. Match text may itself
+	// contain numeric colon-delimited fields, which are not record structure.
+	searchFrom := 0
+	if len(line) >= 2 && line[1] == ':' && ((line[0] >= 'A' && line[0] <= 'Z') || (line[0] >= 'a' && line[0] <= 'z')) {
+		searchFrom = 2
+	}
+	for searchFrom < len(line) {
+		lineStartOffset := strings.IndexByte(line[searchFrom:], ':')
+		if lineStartOffset < 0 {
 			return ""
 		}
-		lineStart := strings.LastIndex(line[:lineEnd], ":")
-		if lineStart < 0 {
+		lineStart := searchFrom + lineStartOffset
+		lineEndOffset := strings.IndexByte(line[lineStart+1:], ':')
+		if lineEndOffset < 0 {
 			return ""
 		}
+		lineEnd := lineStart + 1 + lineEndOffset
 		if _, err := strconv.Atoi(line[lineStart+1 : lineEnd]); err == nil {
 			return strings.TrimSpace(line[:lineStart])
 		}
-		end = lineStart
+		searchFrom = lineStart + 1
 	}
 	return ""
 }
diff --git a/internal/tools/output_policies_test.go b/internal/tools/output_policies_test.go
index fbf828d72..bff4aeacc 100644
--- a/internal/tools/output_policies_test.go
+++ b/internal/tools/output_policies_test.go
@@ -58,6 +58,22 @@ func TestSearchOutputPolicyPreservesWindowsPathCoverage(t *testing.T) {
 	}
 }
 
+func TestSearchResultFileIgnoresNumericMatchContent(t *testing.T) {
+	tests := []struct {
+		line string
+		want string
+	}{
+		{line: `C:\workspace\a.go:12: error code:123: failed`, want: `C:\workspace\a.go`},
+		{line: `/workspace/a.go:12: error code:123: failed`, want: `/workspace/a.go`},
+		{line: `/workspace/name:with-colon.go:12: match`, want: `/workspace/name:with-colon.go`},
+	}
+	for _, test := range tests {
+		if got := searchResultFile(test.line); got != test.want {
+			t.Errorf("searchResultFile(%q) = %q, want %q", test.line, got, test.want)
+		}
+	}
+}
+
 func TestProcessOutputPolicyCollapsesRepetitiveLogsAndKeepsDiagnostics(t *testing.T) {
 	input := "starting server\n" + strings.Repeat("polling...\n", 300) + "WARNING: queue slow\nERROR: request failed\nshutdown complete"
 	got := budgetSemanticOutput(input, outputCategoryProcess, semanticTestBudget())

From 7cebc447caf927166de77ad39bab8937771bff59 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 23:38:26 +0530
Subject: [PATCH 14/15] fix(output): preserve alias and truncation metadata

---
 internal/tools/bash.go                 | 11 +++---
 internal/tools/exec_command.go         | 11 +++---
 internal/tools/output_boundary.go      | 24 +++++++++----
 internal/tools/output_boundary_test.go | 49 +++++++++++++++++++++++++
 internal/trace/output_budget_test.go   | 50 ++++++++++++++++++++++++--
 5 files changed, 126 insertions(+), 19 deletions(-)

diff --git a/internal/tools/bash.go b/internal/tools/bash.go
index 218a30014..661e2f524 100644
--- a/internal/tools/bash.go
+++ b/internal/tools/bash.go
@@ -24,13 +24,14 @@ type bashTool struct {
 }
 
 func (bashTool) outputCategory(args map[string]any) outputCategory {
-	command, _ := args["command"].(string)
-	if command == "" {
-		command, _ = args["cmd"].(string)
-	}
+	command, _ := bashCommandArg(args)
 	return shellOutputCategory(command)
 }
 
+func bashCommandArg(args map[string]any) (string, error) {
+	return aliasedStringArg(args, []string{"command", "cmd", "script", "shell"}, "", true, false)
+}
+
 func NewBashTool(workspaceRoot string) Tool {
 	return NewScopedBashTool(workspaceRoot, nil)
 }
@@ -83,7 +84,7 @@ func (tool bashTool) RunWithOptions(ctx context.Context, args map[string]any, op
 }
 
 func (tool bashTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine, directBudget bool) Result {
-	commandText, err := aliasedStringArg(args, []string{"command", "cmd", "script", "shell"}, "", true, false)
+	commandText, err := bashCommandArg(args)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for bash: " + err.Error())
 	}
diff --git a/internal/tools/exec_command.go b/internal/tools/exec_command.go
index a30fb1b9f..100169936 100644
--- a/internal/tools/exec_command.go
+++ b/internal/tools/exec_command.go
@@ -428,13 +428,14 @@ type execCommandTool struct {
 }
 
 func (execCommandTool) outputCategory(args map[string]any) outputCategory {
-	command, _ := args["cmd"].(string)
-	if command == "" {
-		command, _ = args["command"].(string)
-	}
+	command, _ := execCommandArg(args)
 	return shellOutputCategory(command)
 }
 
+func execCommandArg(args map[string]any) (string, error) {
+	return aliasedStringArg(args, []string{"cmd", "command", "script", "shell"}, "", true, false)
+}
+
 func NewExecCommandTool(workspaceRoot string, manager *execSessionManager) Tool {
 	return NewScopedExecCommandTool(workspaceRoot, nil, manager)
 }
@@ -507,7 +508,7 @@ func (tool execCommandTool) StopAllExecSessions() []int {
 }
 
 func (tool execCommandTool) run(ctx context.Context, args map[string]any, engine *zeroSandbox.Engine, directBudget bool) Result {
-	commandText, err := aliasedStringArg(args, []string{"cmd", "command", "script", "shell"}, "", true, false)
+	commandText, err := execCommandArg(args)
 	if err != nil {
 		return errorResult("Error: Invalid arguments for exec_command: " + err.Error())
 	}
diff --git a/internal/tools/output_boundary.go b/internal/tools/output_boundary.go
index 903e6cd2f..ab897d2f1 100644
--- a/internal/tools/output_boundary.go
+++ b/internal/tools/output_boundary.go
@@ -28,6 +28,18 @@ func applyRegistryOutputBudget(tool Tool, toolName string, args map[string]any,
 	if budgeted.truncated {
 		budgeted = attachExistingSpill(toolName, result.Output, budget, budgeted)
 	}
+	if result.Truncated {
+		budgeted.truncated = true
+		if budgeted.reason == "" {
+			budgeted.reason = result.Meta["truncation_reason"]
+			if budgeted.reason == "" {
+				budgeted.reason = "upstream_tool_budget"
+			}
+		}
+		if budgeted.spillPath == "" {
+			budgeted.spillPath = result.Meta["spill_path"]
+		}
+	}
 	result.Output = budgeted.text
 	result.Truncated = result.Truncated || budgeted.truncated
 	result.Meta = addOutputBudgetMetadata(result.Meta, budgeted)
@@ -219,6 +231,11 @@ func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[
 	meta[outputBudgetEstimatedOriginalTokensMeta] = strconv.Itoa(output.estimatedOriginalTokens)
 	meta[outputBudgetEstimatedRetainedTokensMeta] = strconv.Itoa(output.estimatedRetainedTokens)
 	meta[outputBudgetSpillCreatedMeta] = strconv.FormatBool(output.spillPath != "")
+	// These established fields describe the final model-visible output. Refresh
+	// them on every pass because redaction and after-tool hooks may change the
+	// text even when this pass does not newly truncate it.
+	meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
+	meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
 	if output.reason != "" {
 		meta[outputBudgetReasonMeta] = output.reason
 	}
@@ -227,13 +244,6 @@ func addOutputBudgetMetadata(meta map[string]string, output budgetedOutput) map[
 		if _, exists := meta["raw_bytes"]; !exists {
 			meta["raw_bytes"] = strconv.Itoa(output.originalBytes)
 		}
-		// This is the final, model-visible output after semantic budgeting. A
-		// tool may have reported its pre-budget emitted size, but retaining that
-		// value here would make the established field disagree with Output.
-		meta["emitted_bytes"] = strconv.Itoa(output.retainedBytes)
-		if _, exists := meta["estimated_tokens"]; !exists {
-			meta["estimated_tokens"] = strconv.Itoa(output.estimatedRetainedTokens)
-		}
 		meta["truncated"] = "true"
 		meta["truncation_reason"] = output.reason
 	}
diff --git a/internal/tools/output_boundary_test.go b/internal/tools/output_boundary_test.go
index 47a4f43d7..ea55b6910 100644
--- a/internal/tools/output_boundary_test.go
+++ b/internal/tools/output_boundary_test.go
@@ -238,6 +238,55 @@ func TestShellOutputCategoryClassification(t *testing.T) {
 	}
 }
 
+func TestShellToolOutputCategoryUsesAllCommandAliases(t *testing.T) {
+	providers := []struct {
+		name     string
+		provider outputPolicyProvider
+	}{
+		{name: "bash", provider: NewBashTool(t.TempDir()).(outputPolicyProvider)},
+		{name: "exec_command", provider: NewExecCommandTool(t.TempDir(), newExecSessionManager()).(outputPolicyProvider)},
+	}
+	for _, provider := range providers {
+		for _, alias := range []string{"command", "cmd", "script", "shell"} {
+			t.Run(provider.name+"/"+alias, func(t *testing.T) {
+				if got := provider.provider.outputCategory(map[string]any{alias: "go test ./..."}); got != outputCategoryTest {
+					t.Fatalf("category = %q, want test", got)
+				}
+			})
+		}
+	}
+
+	if got := providers[0].provider.outputCategory(map[string]any{"command": "make build", "cmd": "go test ./..."}); got != outputCategoryProcess {
+		t.Fatalf("bash alias precedence category = %q, want process", got)
+	}
+	if got := providers[1].provider.outputCategory(map[string]any{"cmd": "go test ./...", "command": "make build"}); got != outputCategoryTest {
+		t.Fatalf("exec_command alias precedence category = %q, want test", got)
+	}
+}
+
+func TestRegistryBudgetPreservesExistingTruncationAndRefreshesMetadata(t *testing.T) {
+	output := "post-hook output"
+	result := applyRegistryOutputBudget(newCeilingFakeTool("existing_truncation", output), "existing_truncation", map[string]any{}, Result{
+		Status:    StatusOK,
+		Output:    output,
+		Truncated: true,
+		Meta: map[string]string{
+			"emitted_bytes":     "999",
+			"estimated_tokens":  "999",
+			"truncation_reason": "capture_budget",
+		},
+	})
+	if !result.Truncated || result.Meta["truncated"] != "true" || result.Meta[outputBudgetReasonMeta] != "capture_budget" {
+		t.Fatalf("prior truncation state was lost: %#v", result)
+	}
+	if result.Meta["emitted_bytes"] != strconv.Itoa(len(output)) || result.Meta["estimated_tokens"] != strconv.Itoa(estimateOutputTokens(output)) {
+		t.Fatalf("final output metadata is stale: %#v", result.Meta)
+	}
+	if result.Meta[outputBudgetSpillCreatedMeta] != "false" {
+		t.Fatalf("existing truncation unexpectedly created a new spill: %#v", result.Meta)
+	}
+}
+
 func TestSelfManagedOutputBudgetUsesSemanticTestPolicy(t *testing.T) {
 	setTestTempDir(t)
 	input := "stdout:\n" + strings.Repeat("PASS progress\n", 8_000) +
diff --git a/internal/trace/output_budget_test.go b/internal/trace/output_budget_test.go
index 72f26acbd..0b4e185b9 100644
--- a/internal/trace/output_budget_test.go
+++ b/internal/trace/output_budget_test.go
@@ -2,6 +2,8 @@ package trace
 
 import (
 	"bytes"
+	"encoding/json"
+	"io"
 	"strings"
 	"testing"
 )
@@ -25,8 +27,52 @@ func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
 	if err := WriteNDJSON(&encoded, recorder.Finish()); err != nil {
 		t.Fatalf("WriteNDJSON: %v", err)
 	}
-	if strings.Contains(encoded.String(), "secret output body") {
-		t.Fatal("trace unexpectedly contains output text")
+	allowedKeys := map[string]bool{
+		"type": true, "tool": true, "category": true, "original_bytes": true, "retained_bytes": true,
+		"estimated_original_tokens": true, "estimated_retained_tokens": true, "truncated": true,
+		"reason": true, "spill_created": true,
+	}
+	findUndocumentedKey := func(record map[string]any) string {
+		for key := range record {
+			if !allowedKeys[key] {
+				return key
+			}
+		}
+		return ""
+	}
+	decoder := json.NewDecoder(strings.NewReader(encoded.String()))
+	var outputBudgetRecord map[string]any
+	for {
+		var record map[string]any
+		if err := decoder.Decode(&record); err != nil {
+			if err == io.EOF {
+				break
+			}
+			t.Fatalf("decode trace record: %v", err)
+		}
+		if record["type"] == "output_budget" {
+			outputBudgetRecord = record
+			break
+		}
+	}
+	if outputBudgetRecord == nil {
+		t.Fatal("missing output_budget trace record")
+	}
+	if key := findUndocumentedKey(outputBudgetRecord); key != "" {
+		t.Fatalf("output_budget trace contains undocumented key %q", key)
+	}
+	for key := range allowedKeys {
+		if _, exists := outputBudgetRecord[key]; !exists {
+			t.Fatalf("output_budget trace missing documented key %q", key)
+		}
+	}
+	contaminated := make(map[string]any, len(outputBudgetRecord)+1)
+	for key, value := range outputBudgetRecord {
+		contaminated[key] = value
+	}
+	contaminated["output"] = "secret output body"
+	if key := findUndocumentedKey(contaminated); key == "" {
+		t.Fatal("trace key validation would allow raw secret output")
 	}
 	parsed, err := ReadNDJSON(strings.NewReader(encoded.String()))
 	if err != nil {

From a5553394fe5fdbcb4499b69e00c7e766938dbd33 Mon Sep 17 00:00:00 2001
From: KRATOS <kratos@KRATOSs-Mac-mini.local>
Date: Fri, 17 Jul 2026 23:47:42 +0530
Subject: [PATCH 15/15] test(trace): validate output budget metadata

---
 internal/trace/output_budget_test.go | 24 ++++++++++++++++++++----
 1 file changed, 20 insertions(+), 4 deletions(-)

diff --git a/internal/trace/output_budget_test.go b/internal/trace/output_budget_test.go
index 0b4e185b9..5837c8f29 100644
--- a/internal/trace/output_budget_test.go
+++ b/internal/trace/output_budget_test.go
@@ -11,7 +11,7 @@ import (
 func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
 	recorder := NewRecorder("session", "run", "")
 	recorder.Start()
-	recorder.EmitOutputBudget(OutputBudgetEvent{
+	event := OutputBudgetEvent{
 		Tool:                    "grep",
 		Category:                "search",
 		OriginalBytes:           10000,
@@ -21,12 +21,17 @@ func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
 		Truncated:               true,
 		Reason:                  "semantic_search_budget",
 		SpillCreated:            true,
-	})
+	}
+	recorder.EmitOutputBudget(event)
 
 	var encoded bytes.Buffer
 	if err := WriteNDJSON(&encoded, recorder.Finish()); err != nil {
 		t.Fatalf("WriteNDJSON: %v", err)
 	}
+	const secretOutput = "secret output body"
+	if strings.Contains(encoded.String(), secretOutput) {
+		t.Fatal("output_budget trace contains raw secret output")
+	}
 	allowedKeys := map[string]bool{
 		"type": true, "tool": true, "category": true, "original_bytes": true, "retained_bytes": true,
 		"estimated_original_tokens": true, "estimated_retained_tokens": true, "truncated": true,
@@ -66,11 +71,22 @@ func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
 			t.Fatalf("output_budget trace missing documented key %q", key)
 		}
 	}
+	recordJSON, err := json.Marshal(outputBudgetRecord)
+	if err != nil {
+		t.Fatalf("encode output_budget trace record: %v", err)
+	}
+	var serializedEvent OutputBudgetEvent
+	if err := json.Unmarshal(recordJSON, &serializedEvent); err != nil {
+		t.Fatalf("decode output_budget trace event: %v", err)
+	}
+	if serializedEvent != event {
+		t.Fatalf("serialized output_budget event = %#v, want %#v", serializedEvent, event)
+	}
 	contaminated := make(map[string]any, len(outputBudgetRecord)+1)
 	for key, value := range outputBudgetRecord {
 		contaminated[key] = value
 	}
-	contaminated["output"] = "secret output body"
+	contaminated["output"] = secretOutput
 	if key := findUndocumentedKey(contaminated); key == "" {
 		t.Fatal("trace key validation would allow raw secret output")
 	}
@@ -78,7 +94,7 @@ func TestOutputBudgetTraceRoundTripContainsNoOutput(t *testing.T) {
 	if err != nil {
 		t.Fatalf("ReadNDJSON: %v", err)
 	}
-	if len(parsed.OutputBudgets) != 1 || parsed.OutputBudgets[0].Tool != "grep" || !parsed.OutputBudgets[0].Truncated {
+	if len(parsed.OutputBudgets) != 1 || parsed.OutputBudgets[0] != event {
 		t.Fatalf("unexpected round trip: %#v", parsed.OutputBudgets)
 	}
 }