diff --git a/packages/editor/components/AnnotateAgentTerminalPanel.tsx b/packages/editor/components/AnnotateAgentTerminalPanel.tsx
index b08477457..73d78493e 100644
--- a/packages/editor/components/AnnotateAgentTerminalPanel.tsx
+++ b/packages/editor/components/AnnotateAgentTerminalPanel.tsx
@@ -251,12 +251,8 @@ export const AnnotateAgentTerminalPanel = forwardRef<
     stopRequestedRef.current = true;
     const session = sessionRef.current;
     if (!session) {
-      if (startedAgentId) {
-        closeAfterStopRef.current = closeAfterStop;
-        setStatus("stopping");
-        return;
-      }
       clearTimers();
+      closeAfterStopRef.current = false;
       stopRequestedRef.current = false;
       setStartedAgentId(null);
       setStatus("idle");
@@ -276,7 +272,7 @@ export const AnnotateAgentTerminalPanel = forwardRef<
       sessionRef.current?.pty.kill();
       if (closeAfterStopRef.current) onClose();
     }, 1400));
-  }, [clearTimers, onClose, onSessionActiveChange, onSessionReadyChange, startedAgentId]);
+  }, [clearTimers, onClose, onSessionActiveChange, onSessionReadyChange]);
 
   const sendMessage = useCallback((message: string) => {
     const text = message.trim();
@@ -348,7 +344,12 @@ export const AnnotateAgentTerminalPanel = forwardRef<
               </button>
             </div>
           </div>
-          <div className="min-h-0 flex-1" style={terminalTheme.shellStyle}>
+          <div className="relative min-h-0 flex-1" style={terminalTheme.shellStyle}>
+            {status === "starting" && (
+              <div className="pointer-events-none absolute left-3 top-3 z-10 rounded border border-border/50 bg-card/95 px-2 py-1 text-[11px] text-muted-foreground shadow-sm">
+                Starting terminal...
+              </div>
+            )}
             <WebTuiTerminal
               key={startedAgentId}
               backend={backend}
@@ -357,7 +358,7 @@ export const AnnotateAgentTerminalPanel = forwardRef<
               prompt={null}
               terminalOptions={terminalOptions}
               terminalColorScheme={terminalTheme.colorScheme}
-              terminalGpuAcceleration="auto"
+              terminalGpuAcceleration="off"
               fontZoom={AGENT_TERMINAL_FONT_ZOOM}
               className="h-full border-0"
               onReady={(session) => {
diff --git a/packages/server/reference-handlers.test.ts b/packages/server/reference-handlers.test.ts
index 389e05374..2e3413982 100644
--- a/packages/server/reference-handlers.test.ts
+++ b/packages/server/reference-handlers.test.ts
@@ -219,4 +219,35 @@ describe("handleFileBrowserFiles", () => {
 		expect(data.workspaceStatus.totals.files).toBe(0);
 		expect(data.workspaceStatus.files).toEqual({});
 	});
+
+	test("caps large folder walks", async () => {
+		const root = makeTempDir("plannotator-files-cap-");
+		writeTempFile(root, "docs/a.md", "a\n");
+		writeTempFile(root, "docs/b.md", "b\n");
+		writeTempFile(root, "docs/c.md", "c\n");
+		const previousLimit = process.env.PLANNOTATOR_FILE_BROWSER_MAX_FILES;
+		process.env.PLANNOTATOR_FILE_BROWSER_MAX_FILES = "2";
+
+		try {
+			const url = new URL("http://localhost/api/reference/files");
+			url.searchParams.set("dirPath", root);
+			const res = await handleFileBrowserFiles(new Request(url.toString()));
+			const data = await res.json() as {
+				tree: VaultNode[];
+				truncated: boolean;
+				fileLimit: number;
+			};
+
+			expect(res.status).toBe(200);
+			expect(flattenTree(data.tree)).toHaveLength(2);
+			expect(data.truncated).toBe(true);
+			expect(data.fileLimit).toBe(2);
+		} finally {
+			if (previousLimit === undefined) {
+				delete process.env.PLANNOTATOR_FILE_BROWSER_MAX_FILES;
+			} else {
+				process.env.PLANNOTATOR_FILE_BROWSER_MAX_FILES = previousLimit;
+			}
+		}
+	});
 });
diff --git a/packages/server/reference-handlers.ts b/packages/server/reference-handlers.ts
index 53c4676d3..a3332c6ef 100644
--- a/packages/server/reference-handlers.ts
+++ b/packages/server/reference-handlers.ts
@@ -543,12 +543,34 @@ export async function handleObsidianDoc(req: Request): Promise<Response> {
 // --- File Browser ---
 
 const FILE_BROWSER_EXTENSIONS = /\.(mdx?|txt|html?)$/i;
+const DEFAULT_FILE_BROWSER_MAX_FILES = 5_000;
 
 function includeWorkspaceFile(relativePath: string, _change: WorkspaceFileChange): boolean {
 	return FILE_BROWSER_EXTENSIONS.test(relativePath) && !isFileBrowserExcludedPath(relativePath);
 }
 
-async function walkFileBrowserFiles(dir: string, root: string, files: Set<string>): Promise<void> {
+function getFileBrowserMaxFiles(): number {
+	const value = Number.parseInt(process.env.PLANNOTATOR_FILE_BROWSER_MAX_FILES ?? "", 10);
+	return Number.isFinite(value) && value > 0 ? value : DEFAULT_FILE_BROWSER_MAX_FILES;
+}
+
+type FileBrowserWalkState = {
+	files: Set<string>;
+	limit: number;
+	truncated: boolean;
+};
+
+function addFileBrowserFile(state: FileBrowserWalkState, relativePath: string): void {
+	if (state.files.has(relativePath)) return;
+	if (state.files.size >= state.limit) {
+		state.truncated = true;
+		return;
+	}
+	state.files.add(relativePath);
+}
+
+async function walkFileBrowserFiles(dir: string, root: string, state: FileBrowserWalkState): Promise<void> {
+	if (state.truncated) return;
 	let entries;
 	try {
 		entries = await readdir(dir, { withFileTypes: true });
@@ -557,14 +579,15 @@ async function walkFileBrowserFiles(dir: string, root: string, files: Set<string
 	}
 
 	for (const entry of entries) {
+		if (state.truncated) return;
 		const fullPath = join(dir, entry.name);
 		const relativePath = relative(root, fullPath).replace(/\\/g, "/");
 		if (entry.isDirectory()) {
 			if (isFileBrowserExcludedPath(relativePath)) continue;
-			await walkFileBrowserFiles(fullPath, root, files);
+			await walkFileBrowserFiles(fullPath, root, state);
 		} else if (entry.isFile() && FILE_BROWSER_EXTENSIONS.test(entry.name)) {
 			if (isFileBrowserExcludedPath(relativePath)) continue;
-			files.add(relativePath);
+			addFileBrowserFile(state, relativePath);
 		}
 	}
 }
@@ -586,16 +609,26 @@ export async function handleFileBrowserFiles(req: Request): Promise<Response> {
 	}
 
 	try {
-		const files = new Set<string>();
-		await walkFileBrowserFiles(resolvedDir, resolvedDir, files);
+		const state: FileBrowserWalkState = {
+			files: new Set<string>(),
+			limit: getFileBrowserMaxFiles(),
+			truncated: false,
+		};
+		await walkFileBrowserFiles(resolvedDir, resolvedDir, state);
 		const workspaceStatus = filterWorkspaceStatusForDirectory(await getWorkspaceStatusForDirectory(resolvedDir), resolvedDir, includeWorkspaceFile);
 		for (const match of getWorkspaceStatusRelativePaths(workspaceStatus, resolvedDir, includeWorkspaceFile)) {
-			files.add(match);
+			addFileBrowserFile(state, match);
+			if (state.truncated) break;
 		}
-		const sortedFiles = [...files].sort();
+		const sortedFiles = [...state.files].sort();
 
 		const tree = buildFileTree(sortedFiles);
-		return Response.json({ tree, workspaceStatus });
+		return Response.json({
+			tree,
+			workspaceStatus,
+			truncated: state.truncated,
+			fileLimit: state.limit,
+		});
 	} catch {
 		return Response.json(
 			{ error: "Failed to list directory files" },
diff --git a/packages/shared/reference-common.test.ts b/packages/shared/reference-common.test.ts
index 4217506ad..14e3012de 100644
--- a/packages/shared/reference-common.test.ts
+++ b/packages/shared/reference-common.test.ts
@@ -9,6 +9,8 @@ describe("isFileBrowserExcludedPath", () => {
 		expect(isFileBrowserExcludedPath("docs/node_modules/pkg/readme.md")).toBe(true);
 		expect(isFileBrowserExcludedPath("docs/dist")).toBe(true);
 		expect(isFileBrowserExcludedPath("docs/dist/generated.md")).toBe(true);
+		expect(isFileBrowserExcludedPath(".claude/worktrees/session/plan.md")).toBe(true);
+		expect(isFileBrowserExcludedPath("packages/app/.agents/skills/review/SKILL.md")).toBe(true);
 	});
 
 	test("matches exact path segments only", () => {
diff --git a/packages/shared/reference-common.ts b/packages/shared/reference-common.ts
index de8430742..ce5557282 100644
--- a/packages/shared/reference-common.ts
+++ b/packages/shared/reference-common.ts
@@ -3,6 +3,8 @@
 export const FILE_BROWSER_EXCLUDED = [
 	"node_modules/",
 	".git/",
+	".claude/",
+	".agents/",
 	"dist/",
 	"build/",
 	".next/",