[soham96]

Why

Hooks can only append to the context window — they can't rewrite the history Claude re-sends each turn, and PreCompact can't replace Claude's summary (anthropics/claude-code#24965). So the old pre-compact.ts (built on a non-existent messages_to_compact contract) never ran, and a hook-injected summary would only cost tokens. Real savings require sitting in the request path.

What

A local proxy — dietcode claude (wrapper, recommended) or dietcode proxy (foreground) — that Claude Code talks to via ANTHROPIC_BASE_URL. On each /v1/messages request it rewrites the outgoing payload via progressive compaction:

[ system + tools ]            untouched (keeps Anthropic's prompt cache warm)
[ running ScaleDown summary ] stands in for older turns; extended only at compaction steps
[ last N turns verbatim ]     live working set

• Not per-call — a per-session running summary is reused; ScaleDown is called only at a compaction step when (summary + tail) crosses SCALEDOWN_PROXY_COMPACT_THRESHOLD (default 50k). Most turns make zero ScaleDown calls.
• Replaces native compaction — smaller forwarded payload ⇒ Claude's auto-compact effectively never fires.
• Reversible — compacted turns are stashed; a marker tells Claude to call the new sd_retrieve tool for the original.
• Cache-safe & fail-open — summary block is byte-stable between steps; any error forwards the original request unchanged. Response streamed back untouched.
• Claude Code only — Codex/Cursor installs are unaffected (different wire format), keeping their existing hooks/rules.

Also in this PR

• setup: opt-in (recommended) claude → dietcode claude alias; removed on dietcode uninstall. No recursion (wrapper spawns the real binary).
• Status line shows DietCode compaction off when a session is not running through the proxy.
• Neutralized the broken pre-compact.ts and its false savings accounting.
• New sd_retrieve MCP tool.

Notes

• No new dependencies — built-in node:http + global fetch only. The only package.json change is a new dietcode-proxy bin entry.
• All 121 tests pass; new suites cover src/proxy/{transform,store,server} (progressive behavior, cache-stability, auth passthrough, fail-open).

Deferred to a later release

Classification-driven tool routing in the proxy (the current UserPromptSubmit intent hint is dead code — {prompt} isn't a valid hook output). Plan captured; not in this PR.

🤖 Generated with Claude Code