diff --git a/packages/core/src/public/index.ts b/packages/core/src/public/index.ts
index abfe1d01f..2229039b9 100644
--- a/packages/core/src/public/index.ts
+++ b/packages/core/src/public/index.ts
@@ -3,7 +3,7 @@ export { Agent } from "./agent"
 export { Model } from "./model"
 export { OpenCode } from "./opencode"
 export { Session } from "./session"
-export * as Tool from "./tool"
+export { Tool } from "./tool"
 export { Location } from "./location"
 export { Prompt } from "../session/prompt"
 export { AbsolutePath } from "../schema"
diff --git a/packages/core/src/public/tool.ts b/packages/core/src/public/tool.ts
index d40303d93..97b436fed 100644
--- a/packages/core/src/public/tool.ts
+++ b/packages/core/src/public/tool.ts
@@ -4,7 +4,7 @@ import { Effect, Scope } from "effect"
 import type { AnyTool, RegistrationError } from "../tool/tool"
 
 export { Failure, RegistrationError, make } from "../tool/tool"
-export type { AnyTool, Content, Context } from "../tool/tool"
+export type { AnyTool, Content, Context, Definition } from "../tool/tool"
 
 export interface Interface {
   /**
diff --git a/packages/core/src/session/runner/llm.ts b/packages/core/src/session/runner/llm.ts
index 0597f2a2e..88ba79098 100644
--- a/packages/core/src/session/runner/llm.ts
+++ b/packages/core/src/session/runner/llm.ts
@@ -320,6 +320,11 @@ export const layer = Layer.effect(
             yield* FiberSet.clear(toolFibers)
             yield* withPublication(publisher.failUnsettledTools("Tool execution interrupted"))
           }
+          if (settled._tag === "Failure" && !Cause.hasInterrupts(settled.cause)) {
+            const failure = Cause.squash(settled.cause)
+            const message = failure instanceof Error ? failure.message : String(failure)
+            yield* withPublication(publisher.failUnsettledTools(`Tool execution failed: ${message}`))
+          }
           if (publisher.hasProviderError())
             yield* withPublication(publisher.failUnsettledTools("Tool execution interrupted"))
           if (stream._tag === "Success" && !publisher.hasProviderError())
diff --git a/packages/core/src/state.ts b/packages/core/src/state.ts
index fab9e9780..36a2e471a 100644
--- a/packages/core/src/state.ts
+++ b/packages/core/src/state.ts
@@ -61,30 +61,40 @@ export function create<State extends Objectish, Editor>(options: Options<State,
     state = next
   })
 
-  const rebuild = Effect.fn("State.rebuild")(function* () {
+  const rebuild = Effect.fnUntraced(function* () {
     const next = options.initial()
     const api = options.editor(next as Draft<State>)
     for (const transform of transforms)
       yield* Effect.sync(() => transform.update(api)).pipe(Effect.withSpan("State.rebuild.update", {}))
     yield* commit(next)
-  }, semaphore.withPermit)
+  })
 
   return {
     get: () => state,
     transform: Effect.fn("State.transform")(function* () {
-      const transform = { update: (_editor: Editor) => {} }
-      transforms = [...transforms, transform]
       const scope = yield* Scope.Scope
-      yield* Scope.addFinalizer(
-        scope,
-        Effect.sync(() => {
-          transforms = transforms.filter((item) => item !== transform)
-        }).pipe(Effect.andThen(rebuild())),
+      return yield* Effect.uninterruptible(
+        Effect.gen(function* () {
+          const transform = { update: (_editor: Editor) => {} }
+          transforms = [...transforms, transform]
+          yield* Scope.addFinalizer(
+            scope,
+            semaphore.withPermit(
+              Effect.sync(() => {
+                transforms = transforms.filter((item) => item !== transform)
+              }).pipe(Effect.andThen(rebuild())),
+            ),
+          )
+          return (update: Transform<Editor>) =>
+            Effect.uninterruptible(
+              semaphore.withPermit(
+                Effect.sync(() => {
+                  transform.update = update
+                }).pipe(Effect.andThen(rebuild())),
+              ),
+            )
+        }),
       )
-      return Effect.fnUntraced(function* (update: Transform<Editor>) {
-        transform.update = update
-        yield* rebuild()
-      })
     }),
     update: Effect.fn("State.update")(function* (update, reason) {
       const api = options.editor(state as Draft<State>)
diff --git a/packages/core/src/tool-output-store.ts b/packages/core/src/tool-output-store.ts
index bfb374df6..2d15ee8d0 100644
--- a/packages/core/src/tool-output-store.ts
+++ b/packages/core/src/tool-output-store.ts
@@ -11,7 +11,6 @@ import type { ToolOutput } from "@opencode-ai/llm"
 
 export const MAX_LINES = 2_000
 export const MAX_BYTES = 50 * 1024
-export const MAX_INLINE_MEDIA_BYTES = 5 * 1024 * 1024
 export const RETENTION = Duration.days(7)
 
 export const MANAGED_DIRECTORY = "tool-output"
@@ -32,13 +31,7 @@ export class StorageError extends Schema.TaggedErrorClass<StorageError>()("ToolO
   cause: Schema.Defect,
 }) {}
 
-export class MediaLimitError extends Schema.TaggedErrorClass<MediaLimitError>()("ToolOutputStore.MediaLimitError", {
-  mime: Schema.String,
-  bytes: Schema.Int,
-  limit: Schema.Int,
-}) {}
-
-export type Error = StorageError | MediaLimitError
+export type Error = StorageError
 
 export interface Interface {
   readonly limits: () => Effect.Effect<{ readonly maxLines: number; readonly maxBytes: number }>
@@ -139,37 +132,33 @@ export const layer = Layer.effect(
     const bound = Effect.fn("ToolOutputStore.bound")(function* (input: BoundInput) {
       const outputLimits = yield* limits()
       const media = input.output.content.filter((item) => item.type === "file")
-      let mediaBytes = 0
-      for (const item of media) {
-        if (item.source.type !== "data") continue
-        mediaBytes += Buffer.byteLength(item.source.data, "utf-8")
-        if (mediaBytes > MAX_INLINE_MEDIA_BYTES)
-          return yield* new MediaLimitError({ mime: item.mime, bytes: mediaBytes, limit: MAX_INLINE_MEDIA_BYTES })
-      }
-      const contextual = {
-        structured: media.length > 0 ? {} : input.output.structured,
-        content: input.output.content.filter((item) => item.type === "text"),
-      }
-      const encoded = yield* Effect.try({
-        try: () => JSON.stringify(contextual, null, 2),
-        catch: (cause) => new StorageError({ operation: "encode", cause }),
-      })
-      if (lineCount(encoded) <= outputLimits.maxLines && Buffer.byteLength(encoded, "utf-8") <= outputLimits.maxBytes)
+      const text = input.output.content.filter((item) => item.type === "text")
+      const contextual =
+        input.output.content.length === 0
+          ? yield* Effect.try({
+              try: () => JSON.stringify(input.output.structured, null, 2) ?? String(input.output.structured),
+              catch: (cause) => new StorageError({ operation: "encode", cause }),
+            })
+          : text.map((item) => item.text).join("")
+      if (
+        lineCount(contextual) <= outputLimits.maxLines &&
+        Buffer.byteLength(contextual, "utf-8") <= outputLimits.maxBytes
+      )
         return {
-          output: { structured: contextual.structured, content: input.output.content },
+          output: input.output,
           outputPaths: [],
         }
 
-      const outputPath = yield* write(encoded)
+      const outputPath = yield* write(contextual)
       const marker = `... output truncated; full content saved to ${outputPath} ...`
 
       return {
         output: {
-          structured: {},
+          structured: input.output.structured,
           content: [
             {
               type: "text" as const,
-              text: boundedPreview(encoded, marker, outputLimits.maxLines, outputLimits.maxBytes),
+              text: boundedPreview(contextual, marker, outputLimits.maxLines, outputLimits.maxBytes),
             },
             ...media,
           ],
diff --git a/packages/core/src/tool/AGENTS.md b/packages/core/src/tool/AGENTS.md
index 548dc12e0..5e8066e1d 100644
--- a/packages/core/src/tool/AGENTS.md
+++ b/packages/core/src/tool/AGENTS.md
@@ -56,3 +56,4 @@ Producer capture limits are separate. For example, Bash keeps `AppProcess.maxOut
 
 - Plugin boot has not been redesigned to register canonical tools through `Tools.Service`; do not redesign it as part of leaf migrations.
 - MCP and future Session-scoped registrations still need an explicit canonical registration design.
+- The public Session result shape currently exposes managed `outputPaths`; full storage encapsulation requires a future opaque managed-output reference design.
diff --git a/packages/core/src/tool/apply-patch.ts b/packages/core/src/tool/apply-patch.ts
index 820eeca35..138ecc03d 100644
--- a/packages/core/src/tool/apply-patch.ts
+++ b/packages/core/src/tool/apply-patch.ts
@@ -12,7 +12,7 @@ import { Tools } from "./tools"
 
 export const name = "apply_patch"
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   patchText: Schema.String.annotate({
     description: "The full patch text describing add, update, and delete operations",
   }),
@@ -24,10 +24,10 @@ export const Applied = Schema.Struct({
   target: Schema.String,
 })
 
-export const Success = Schema.Struct({ applied: Schema.Array(Applied) })
-export type Success = typeof Success.Type
+export const Output = Schema.Struct({ applied: Schema.Array(Applied) })
+export type Output = typeof Output.Type
 
-export const toModelOutput = (output: Success) =>
+export const toModelOutput = (output: Output) =>
   [
     "Applied patch sequentially:",
     ...output.applied.map(
@@ -57,8 +57,8 @@ export const layer = Layer.effectDiscard(
           Tool.make({
             description:
               "Apply one patch containing add, update, and delete file operations. All targets are resolved and approved before target contents are read. Operations apply sequentially; if a later operation fails, earlier operations remain applied and the failure reports them explicitly. Moves and atomic rollback are not supported yet.",
-            input: Parameters,
-            output: Success,
+            input: Input,
+            output: Output,
             toModelOutput: ({ output }) => [toolText({ type: "text", text: toModelOutput(output) })],
             execute: (input, context) => {
               const applied: Array<typeof Applied.Type> = []
diff --git a/packages/core/src/tool/bash.ts b/packages/core/src/tool/bash.ts
index 4ff9240ae..2365bbc3b 100644
--- a/packages/core/src/tool/bash.ts
+++ b/packages/core/src/tool/bash.ts
@@ -18,7 +18,7 @@ export const DEFAULT_TIMEOUT_MS = 2 * 60 * 1_000
 export const MAX_TIMEOUT_MS = 10 * 60 * 1_000
 export const MAX_CAPTURE_BYTES = 1024 * 1024
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   command: Schema.String.annotate({ description: "Shell command string to execute" }),
   workdir: Schema.String.pipe(Schema.optional).annotate({
     description: "Working directory. Defaults to the active Location; relative paths resolve from that Location.",
@@ -33,7 +33,7 @@ export const Parameters = Schema.Struct({
   }),
 })
 
-const Success = Schema.Struct({
+const Output = Schema.Struct({
   command: Schema.String,
   cwd: Schema.String,
   exitCode: Schema.Number.pipe(Schema.optional),
@@ -46,7 +46,7 @@ const Success = Schema.Struct({
   warnings: Schema.Array(Schema.String).pipe(Schema.optional),
 })
 
-type Success = typeof Success.Type
+type Output = typeof Output.Type
 
 const defaultShell = () => (process.platform === "win32" ? (process.env.COMSPEC ?? "cmd.exe") : "/bin/sh")
 
@@ -62,7 +62,7 @@ const captureNotice = (stdoutTruncated: boolean, stderrTruncated: boolean) => {
   return undefined
 }
 
-const modelOutput = (output: Success) => {
+const modelOutput = (output: Output) => {
   const warnings = output.warnings?.length
     ? `\n\nWarnings:\n${output.warnings.map((warning) => `- ${warning}`).join("\n")}`
     : ""
@@ -117,8 +117,8 @@ export const layer = Layer.effectDiscard(
       .register({
         [name]: Tool.make({
           description: `Execute one shell command string with the host user's filesystem, process, and network authority. The active Location is the default working directory. Relative workdir values resolve from that Location. External workdir values require external_directory approval; best-effort command-argument path warnings are advisory only. Timeout values are milliseconds (default: ${DEFAULT_TIMEOUT_MS}; maximum: ${MAX_TIMEOUT_MS}). Uses the configured shell when set; otherwise uses /bin/sh on POSIX and COMSPEC or cmd.exe on Windows.`,
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: modelOutput(output) })],
           execute: (input, context) =>
             Effect.gen(function* () {
diff --git a/packages/core/src/tool/edit.ts b/packages/core/src/tool/edit.ts
index 01cde8440..bbd58af8a 100644
--- a/packages/core/src/tool/edit.ts
+++ b/packages/core/src/tool/edit.ts
@@ -18,7 +18,7 @@ import { Tools } from "./tools"
 
 export const name = "edit"
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   path: Schema.String.annotate({
     description:
       "File path to edit. Relative paths resolve within the active Location. Absolute paths inside that Location are accepted; external absolute paths require external_directory approval. Named project references are read-oriented and are not accepted.",
@@ -30,14 +30,14 @@ export const Parameters = Schema.Struct({
   }),
 })
 
-export const Success = Schema.Struct({
+export const Output = Schema.Struct({
   operation: Schema.Literal("write"),
   target: Schema.String,
   resource: Schema.String,
   existed: Schema.Boolean,
   replacements: Schema.Number,
 })
-export type Success = typeof Success.Type
+export type Output = typeof Output.Type
 
 const normalizeLineEndings = (text: string) => text.replaceAll("\r\n", "\n")
 const detectLineEnding = (text: string): "\n" | "\r\n" => (text.includes("\r\n") ? "\r\n" : "\n")
@@ -70,7 +70,7 @@ const previewLines = (value: string, prefix: "+" | "-") => {
   return shown
 }
 
-export const toModelOutput = (output: Success, oldString: string, newString: string) =>
+export const toModelOutput = (output: Output, oldString: string, newString: string) =>
   [
     `Edited file successfully: ${output.resource}`,
     `Replacements: ${output.replacements}`,
@@ -101,8 +101,8 @@ export const layer = Layer.effectDiscard(
           Tool.make({
             description:
               "Replace exact text in one file. Relative paths resolve within the active Location. Absolute paths inside the Location are accepted. Explicit external absolute paths require external_directory approval before edit approval. Named project references are read-oriented and are not accepted.",
-            input: Parameters,
-            output: Success,
+            input: Input,
+            output: Output,
             toModelOutput: ({ input, output }) => [
               toolText({ type: "text", text: toModelOutput(output, input.oldString, input.newString) }),
             ],
@@ -188,7 +188,7 @@ export const layer = Layer.effectDiscard(
                     content: joinBom(next.text, source.bom || next.bom),
                   }),
                 )
-                return { ...result, replacements } satisfies Success
+                return { ...result, replacements } satisfies Output
               })
             },
           }),
diff --git a/packages/core/src/tool/glob.ts b/packages/core/src/tool/glob.ts
index c47043369..164604b24 100644
--- a/packages/core/src/tool/glob.ts
+++ b/packages/core/src/tool/glob.ts
@@ -10,7 +10,7 @@ import { Tools } from "./tools"
 
 export const name = "glob"
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   pattern: LocationSearch.FilesInput.fields.pattern.annotate({ description: "Glob pattern to match files against" }),
   path: LocationSearch.FilesInput.fields.path.annotate({
     description: "Relative directory to search. Defaults to the active Location.",
@@ -56,7 +56,7 @@ export const layer = Layer.effectDiscard(
         [name]: Tool.make({
           description:
             "Find files by glob pattern within the active Location or a named project reference. Returns concise relative file resources. Use a relative path to narrow the search and limit to bound the result count.",
-          input: Parameters,
+          input: Input,
           output: LocationSearch.FilesResult,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: toModelOutput(output) })],
           execute: (input, context) =>
diff --git a/packages/core/src/tool/grep.ts b/packages/core/src/tool/grep.ts
index 0c140a29e..41483662e 100644
--- a/packages/core/src/tool/grep.ts
+++ b/packages/core/src/tool/grep.ts
@@ -11,7 +11,7 @@ import { Tools } from "./tools"
 
 export const name = "grep"
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   pattern: LocationSearch.GrepInput.fields.pattern.annotate({
     description: "Regex pattern to search for in file contents",
   }),
@@ -29,10 +29,10 @@ export const Parameters = Schema.Struct({
   }),
 })
 
-type Success = typeof LocationSearch.GrepResult.Encoded
+type Output = typeof LocationSearch.GrepResult.Encoded
 
 /** Format raw Location search matches into the familiar concise model output. */
-export const toModelOutput = (output: Success) => {
+export const toModelOutput = (output: Output) => {
   const lines = output.items.length === 0 ? ["No files found"] : [`Found ${output.items.length} matches`]
   let current = ""
   for (const match of output.items) {
@@ -71,7 +71,7 @@ export const layer = Layer.effectDiscard(
         [name]: Tool.make({
           description:
             "Search file contents by regular expression within the active Location, a named project reference, or an absolute managed tool-output file. Use a path to narrow the search, include to filter files by glob, and limit to bound the match count. Returns concise file resources, line numbers, and bounded line previews.",
-          input: Parameters,
+          input: Input,
           output: LocationSearch.GrepResult,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: toModelOutput(output) })],
           execute: (input, context) =>
diff --git a/packages/core/src/tool/question.ts b/packages/core/src/tool/question.ts
index a0217bbf0..7422e2f0b 100644
--- a/packages/core/src/tool/question.ts
+++ b/packages/core/src/tool/question.ts
@@ -20,14 +20,14 @@ Usage notes:
 - Answers are returned as arrays of labels; set \`multiple: true\` to allow selecting more than one
 - If you recommend a specific option, make that the first option in the list and add "(Recommended)" at the end of the label`
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   questions: Schema.Array(QuestionV2.Prompt).annotate({ description: "Questions to ask" }),
 })
 
-export const Success = Schema.Struct({
+export const Output = Schema.Struct({
   answers: Schema.Array(QuestionV2.Answer),
 })
-export type Success = typeof Success.Type
+export type Output = typeof Output.Type
 
 export const toModelOutput = (
   questions: ReadonlyArray<QuestionV2.Prompt>,
@@ -52,8 +52,8 @@ export const layer = Layer.effectDiscard(
       .register({
         [name]: Tool.make({
           description,
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ input, output }) => [
             toolText({ type: "text", text: toModelOutput(input.questions, output.answers) }),
           ],
diff --git a/packages/core/src/tool/read.ts b/packages/core/src/tool/read.ts
index b3a610398..45045ad8a 100644
--- a/packages/core/src/tool/read.ts
+++ b/packages/core/src/tool/read.ts
@@ -20,7 +20,7 @@ const LocationInput = Schema.Struct({
   }),
 })
 const Input = LocationInput
-const Success = Schema.Union([FileSystem.Content, FileSystem.TextPage, FileSystem.ListPage])
+const Output = Schema.Union([FileSystem.Content, FileSystem.TextPage, FileSystem.ListPage])
 
 export const layer = Layer.effectDiscard(
   Effect.gen(function* () {
@@ -35,7 +35,7 @@ export const layer = Layer.effectDiscard(
           description:
             "Read a text file or supported image, page through a large UTF-8 text file by line offset, or list a directory page relative to the current location. Absolute paths are accepted only for managed tool-output files.",
           input: Input,
-          output: Success,
+          output: Output,
           toModelOutput: ({ input, output }) => {
             if (!("type" in output) || output.type !== "binary" || !SUPPORTED_IMAGE_MIMES.has(output.mime)) return []
             return [
diff --git a/packages/core/src/tool/registry.ts b/packages/core/src/tool/registry.ts
index 4f20f186c..362a83b82 100644
--- a/packages/core/src/tool/registry.ts
+++ b/packages/core/src/tool/registry.ts
@@ -1,6 +1,6 @@
 export * as ToolRegistry from "./registry"
 
-import { Tool as LlmTool, ToolOutput, type ToolCall, type ToolSettlement } from "@opencode-ai/llm"
+import { ToolOutput, type ToolCall, type ToolDefinition, type ToolSettlement } from "@opencode-ai/llm"
 import { Context, Effect, Layer, Scope } from "effect"
 import { AgentV2 } from "../agent"
 import { PermissionV2 } from "../permission"
@@ -9,7 +9,7 @@ import { SessionSchema } from "../session/schema"
 import { ToolOutputStore } from "../tool-output-store"
 import { Wildcard } from "../util/wildcard"
 import { ApplicationTools } from "./application-tools"
-import { Tool } from "./tool"
+import { definition, permission, settle, validateName, type AnyTool, type RegistrationError } from "./tool"
 import { Tools } from "./tools"
 
 export type ExecuteInput = {
@@ -22,13 +22,11 @@ export type ExecuteInput = {
 export interface Interface {
   readonly materialize: (permissions?: PermissionV2.Ruleset) => Effect.Effect<Materialization>
   /** Internal registration capability exposed publicly only through Tools.Service. */
-  readonly register: (
-    tools: Readonly<Record<string, Tool.AnyTool>>,
-  ) => Effect.Effect<void, Tool.RegistrationError, Scope.Scope>
+  readonly register: (tools: Readonly<Record<string, AnyTool>>) => Effect.Effect<void, RegistrationError, Scope.Scope>
 }
 
 export interface Materialization {
-  readonly definitions: ReadonlyArray<ReturnType<typeof LlmTool.toDefinitions>[number]>
+  readonly definitions: ReadonlyArray<ToolDefinition>
   readonly settle: (input: ExecuteInput) => Effect.Effect<Settlement, ToolOutputStore.Error>
 }
 
@@ -43,7 +41,7 @@ const registryLayer = Layer.effect(
   Effect.gen(function* () {
     const applications = yield* ApplicationTools.Service
     const resources = yield* ToolOutputStore.Service
-    type Registration = { readonly identity: object; readonly tool: Tool.AnyTool }
+    type Registration = { readonly identity: object; readonly tool: AnyTool }
     const local = new Map<string, Array<{ readonly token: object; readonly registration: Registration }>>()
 
     const settleWith = Effect.fn("ToolRegistry.settle")(function* (input: ExecuteInput, advertised?: object) {
@@ -58,7 +56,7 @@ const registryLayer = Layer.effect(
         }
       if (advertised && registration.identity !== advertised)
         return { result: { type: "error" as const, value: `Stale tool call: ${input.call.name}` } }
-      const pending = yield* Tool.settle(registration.tool, input.call, {
+      const pending = yield* settle(registration.tool, input.call, {
         sessionID: input.sessionID,
         agent: input.agent,
         assistantMessageID: input.assistantMessageID,
@@ -84,17 +82,21 @@ const registryLayer = Layer.effect(
       register: Effect.fn("ToolRegistry.register")(function* (tools) {
         const entries = Object.entries(tools)
         if (entries.length === 0) return
-        yield* Effect.forEach(entries, ([name]) => Tool.validateName(name), { discard: true })
-        const token = {}
-        for (const [name, tool] of entries)
-          local.set(name, [...(local.get(name) ?? []), { token, registration: { identity: {}, tool } }])
-        yield* Effect.addFinalizer(() =>
-          Effect.sync(() => {
-            for (const [name] of entries) {
-              const registrations = local.get(name)?.filter((registration) => registration.token !== token) ?? []
-              if (registrations.length > 0) local.set(name, registrations)
-              else local.delete(name)
-            }
+        yield* Effect.forEach(entries, ([name]) => validateName(name), { discard: true })
+        yield* Effect.uninterruptible(
+          Effect.gen(function* () {
+            const token = {}
+            for (const [name, tool] of entries)
+              local.set(name, [...(local.get(name) ?? []), { token, registration: { identity: {}, tool } }])
+            yield* Effect.addFinalizer(() =>
+              Effect.sync(() => {
+                for (const [name] of entries) {
+                  const registrations = local.get(name)?.filter((registration) => registration.token !== token) ?? []
+                  if (registrations.length > 0) local.set(name, registrations)
+                  else local.delete(name)
+                }
+              }),
+            )
           }),
         )
       }),
@@ -105,9 +107,9 @@ const registryLayer = Layer.effect(
           if (registration) registrations.set(name, registration)
         }
         for (const [name, registration] of registrations)
-          if (whollyDisabled(Tool.permission(registration.tool, name), permissions)) registrations.delete(name)
+          if (whollyDisabled(permission(registration.tool, name), permissions)) registrations.delete(name)
         return {
-          definitions: Array.from(registrations, ([name, registration]) => Tool.definition(name, registration.tool)),
+          definitions: Array.from(registrations, ([name, registration]) => definition(name, registration.tool)),
           settle: (input) => {
             const registration = registrations.get(input.call.name)
             if (registration) return settleWith(input, registration.identity)
diff --git a/packages/core/src/tool/skill.ts b/packages/core/src/tool/skill.ts
index 5e930f248..1577d8123 100644
--- a/packages/core/src/tool/skill.ts
+++ b/packages/core/src/tool/skill.ts
@@ -14,11 +14,11 @@ import { Tools } from "./tools"
 export const name = "skill"
 const FILE_LIMIT = 10
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   name: Schema.String.annotate({ description: "The name of the skill from the available skills list" }),
 })
 
-export const Success = Schema.Struct({
+export const Output = Schema.Struct({
   name: Schema.String,
   directory: Schema.String,
   output: Schema.String,
@@ -66,8 +66,8 @@ export const layer = Layer.effectDiscard(
       .register({
         [name]: Tool.make({
           description,
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: output.output })],
           execute: (input, context) =>
             Effect.gen(function* () {
diff --git a/packages/core/src/tool/todowrite.ts b/packages/core/src/tool/todowrite.ts
index e7b0168ed..7471771ef 100644
--- a/packages/core/src/tool/todowrite.ts
+++ b/packages/core/src/tool/todowrite.ts
@@ -9,16 +9,16 @@ import { Tools } from "./tools"
 
 export const name = "todowrite"
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   todos: Schema.Array(SessionTodo.Info).annotate({ description: "The updated todo list" }),
 })
 
-export const Success = Schema.Struct({
+export const Output = Schema.Struct({
   todos: Schema.Array(SessionTodo.Info),
 })
-export type Success = typeof Success.Type
+export type Output = typeof Output.Type
 
-export const toModelOutput = (output: Success) => JSON.stringify(output.todos, null, 2)
+export const toModelOutput = (output: Output) => JSON.stringify(output.todos, null, 2)
 
 export const layer = Layer.effectDiscard(
   Effect.gen(function* () {
@@ -31,8 +31,8 @@ export const layer = Layer.effectDiscard(
         [name]: Tool.make({
           description:
             "Create and maintain a structured task list for the current coding session. Use it to track progress during multi-step work and keep todo statuses current.",
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: toModelOutput(output) })],
           execute: (input, context) =>
             Effect.gen(function* () {
diff --git a/packages/core/src/tool/tool.ts b/packages/core/src/tool/tool.ts
index 9c2996f1b..5ffab7ec8 100644
--- a/packages/core/src/tool/tool.ts
+++ b/packages/core/src/tool/tool.ts
@@ -1,7 +1,7 @@
 export * as Tool from "./tool"
 
-import { Tool as LlmTool, ToolFailure, ToolOutput, type ToolCall } from "@opencode-ai/llm"
-import { Effect, Schema } from "effect"
+import { ToolDefinition, ToolFailure, ToolOutput, type ToolCall } from "@opencode-ai/llm"
+import { Effect, JsonSchema, Schema } from "effect"
 import type { AgentV2 } from "../agent"
 import type { SessionMessage } from "../session/message"
 import type { SessionSchema } from "../session/schema"
@@ -17,14 +17,14 @@ export type SchemaType<A> = Schema.Codec<A, any, never, never>
 
 declare const TypeId: unique symbol
 
-export interface Tool<Input extends SchemaType<any>, Output extends SchemaType<any>> {
+export interface Definition<Input extends SchemaType<any>, Output extends SchemaType<any>> {
   readonly [TypeId]: {
     readonly _Input: Input
     readonly _Output: Output
   }
 }
 
-export type AnyTool = Tool<any, any>
+export type AnyTool = Definition<any, any>
 export const Failure = ToolFailure
 export type Failure = ToolFailure
 
@@ -53,7 +53,7 @@ type Config<Input extends SchemaType<any>, Output extends SchemaType<any>> = {
 
 type Runtime = {
   readonly permission?: string
-  readonly definition: (name: string) => ReturnType<typeof LlmTool.toDefinitions>[number]
+  readonly definition: (name: string) => ToolDefinition
   readonly settle: (call: ToolCall, context: Context) => Effect.Effect<ToolOutput, ToolFailure>
 }
 
@@ -61,16 +61,19 @@ const runtimes = new WeakMap<AnyTool, Runtime>()
 
 export function make<Input extends SchemaType<any>, Output extends SchemaType<any>>(
   config: Config<Input, Output>,
-): Tool<Input, Output> {
-  const tool = Object.freeze({}) as Tool<Input, Output>
-  const definitions = new Map<string, ReturnType<typeof LlmTool.toDefinitions>[number]>()
+): Definition<Input, Output> {
+  const tool = Object.freeze({}) as Definition<Input, Output>
+  const definitions = new Map<string, ToolDefinition>()
   runtimes.set(tool, {
     definition: (name) => {
       const cached = definitions.get(name)
       if (cached) return cached
-      const definition = LlmTool.toDefinitions({
-        [name]: LlmTool.make({ description: config.description, parameters: config.input, success: config.output }),
-      })[0]
+      const definition = new ToolDefinition({
+        name,
+        description: config.description,
+        inputSchema: toJsonSchema(config.input),
+        outputSchema: toJsonSchema(config.output),
+      })
       definitions.set(name, definition)
       return definition
     },
@@ -117,10 +120,10 @@ export const validateName = (name: string) =>
     : Effect.fail(new RegistrationError({ name, message: `Invalid tool name: ${name}` }))
 
 export const withPermission = <Input extends SchemaType<any>, Output extends SchemaType<any>>(
-  tool: Tool<Input, Output>,
+  tool: Definition<Input, Output>,
   permission: string,
 ) => {
-  const decorated = Object.freeze({}) as Tool<Input, Output>
+  const decorated = Object.freeze({}) as Definition<Input, Output>
   runtimes.set(decorated, { ...runtimeOf(tool), permission })
   return decorated
 }
@@ -134,3 +137,9 @@ function runtimeOf(tool: AnyTool) {
   if (!runtime) throw new TypeError("Invalid Core Tool value")
   return runtime
 }
+
+function toJsonSchema(schema: Schema.Top): JsonSchema.JsonSchema {
+  const document = Schema.toJsonSchemaDocument(schema)
+  if (Object.keys(document.definitions).length === 0) return document.schema
+  return { ...document.schema, $defs: document.definitions }
+}
diff --git a/packages/core/src/tool/webfetch.ts b/packages/core/src/tool/webfetch.ts
index d6fbc9187..612d69a08 100644
--- a/packages/core/src/tool/webfetch.ts
+++ b/packages/core/src/tool/webfetch.ts
@@ -16,11 +16,11 @@ export const MAX_TIMEOUT_SECONDS = 120
 
 export const description = `Fetch content from an HTTP or HTTPS URL and return it as text, markdown, or HTML. Markdown is the default.
 
-Use a more targeted tool when one is available. This tool is read-only. Large text results are truncated and saved to a managed file that ordinary Read, Grep, and Bash tools can inspect.`
+Use a more targeted tool when one is available. This tool is read-only. Large text results may be replaced with a preview while the complete output is retained in managed storage.`
 
 const Timeout = Schema.Number.check(Schema.isGreaterThan(0), Schema.isLessThanOrEqualTo(MAX_TIMEOUT_SECONDS))
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   url: Schema.String.annotate({ description: "The HTTP or HTTPS URL to fetch content from" }),
   format: Schema.Literals(["text", "markdown", "html"])
     .annotate({ description: "The format to return the content in. Defaults to markdown." })
@@ -30,14 +30,14 @@ export const Parameters = Schema.Struct({
   }),
 })
 
-const Success = Schema.Struct({
+const Output = Schema.Struct({
   url: Schema.String,
   contentType: Schema.String,
-  format: Parameters.fields.format,
+  format: Input.fields.format,
   output: Schema.String,
 })
 
-type Format = (typeof Parameters.Type)["format"]
+type Format = (typeof Input.Type)["format"]
 
 const acceptHeader = (format: Format) => {
   switch (format) {
@@ -134,8 +134,8 @@ export const layer = Layer.effectDiscard(
       .register({
         [name]: Tool.make({
           description,
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: output.output })],
           execute: (input, context) =>
             Effect.gen(function* () {
diff --git a/packages/core/src/tool/websearch.ts b/packages/core/src/tool/websearch.ts
index 1ef8a1859..a8f2e2dd4 100644
--- a/packages/core/src/tool/websearch.ts
+++ b/packages/core/src/tool/websearch.ts
@@ -33,7 +33,7 @@ Optional controls support result count, live crawling ('fallback' or 'preferred'
 
 The current year is ${new Date().getFullYear()}. Use this year when searching for recent information or current events.`
 
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   query: Schema.String.annotate({ description: "Websearch query" }),
   numResults: Schema.optional(PositiveInt.check(Schema.isLessThanOrEqualTo(MAX_NUM_RESULTS))).annotate({
     description: `Number of search results to return (default: 8, maximum: ${MAX_NUM_RESULTS})`,
@@ -176,7 +176,7 @@ const callMcp = <F extends Schema.Struct.Fields>(
     )
   })
 
-const Success = Schema.Struct({
+const Output = Schema.Struct({
   provider: Provider,
   text: Schema.String,
 })
@@ -192,8 +192,8 @@ export const layer = Layer.effectDiscard(
       .register({
         [name]: Tool.make({
           description,
-          input: Parameters,
-          output: Success,
+          input: Input,
+          output: Output,
           toModelOutput: ({ output }) => [toolText({ type: "text", text: output.text })],
           execute: (input, context) => {
             const provider = selectProvider(context.sessionID, config, config.provider)
diff --git a/packages/core/src/tool/write.ts b/packages/core/src/tool/write.ts
index 3b2eb6401..350d187ed 100644
--- a/packages/core/src/tool/write.ts
+++ b/packages/core/src/tool/write.ts
@@ -18,7 +18,7 @@ import { Tools } from "./tools"
 export const name = "write"
 
 // TODO: Revisit whether model-facing mutation schemas should prefer absolute `filePath` naming for trained-in compatibility after evaluating model behavior.
-export const Parameters = Schema.Struct({
+export const Input = Schema.Struct({
   path: Schema.String.annotate({
     description:
       "File path to write. Relative paths resolve within the active Location. Absolute paths inside that Location are accepted; external absolute paths require external_directory approval. Named project references are read-oriented and are not accepted.",
@@ -26,15 +26,15 @@ export const Parameters = Schema.Struct({
   content: Schema.String.annotate({ description: "Content to write to the file" }),
 })
 
-export const Success = Schema.Struct({
+export const Output = Schema.Struct({
   operation: Schema.Literal("write"),
   target: Schema.String,
   resource: Schema.String,
   existed: Schema.Boolean,
 })
-export type Success = typeof Success.Type
+export type Output = typeof Output.Type
 
-export const toModelOutput = (output: Success) =>
+export const toModelOutput = (output: Output) =>
   `${output.existed ? "Wrote" : "Created"} file successfully: ${output.resource}`
 
 /** Deferred V2 write UX integrations remain visible at the model-facing seam. */
@@ -56,8 +56,8 @@ export const layer = Layer.effectDiscard(
           Tool.make({
             description:
               "Write content to one file. Relative paths resolve within the active Location. Absolute paths inside the Location are accepted. Explicit external absolute paths require external_directory approval before edit approval. Named project references are read-oriented and are not accepted.",
-            input: Parameters,
-            output: Success,
+            input: Input,
+            output: Output,
             toModelOutput: ({ output }) => [toolText({ type: "text", text: toModelOutput(output) })],
             execute: (input, context) =>
               Effect.gen(function* () {
diff --git a/packages/core/test/application-tools.test.ts b/packages/core/test/application-tools.test.ts
index bc35bd9fe..1d0f54120 100644
--- a/packages/core/test/application-tools.test.ts
+++ b/packages/core/test/application-tools.test.ts
@@ -9,7 +9,7 @@ import { ToolRegistry } from "@opencode-ai/core/tool/registry"
 import { executeTool, settleTool, toolDefinitions } from "./lib/tool"
 import { ToolOutputStore } from "@opencode-ai/core/tool-output-store"
 import { Tools } from "@opencode-ai/core/tool/tools"
-import { Effect, Exit, Layer, Schema, Scope } from "effect"
+import { Deferred, Effect, Exit, Fiber, Layer, Schema, Scope } from "effect"
 import { testEffect } from "./lib/effect"
 
 const permission = Layer.mock(PermissionV2.Service, {
@@ -136,7 +136,7 @@ describe("ApplicationTools", () => {
           ],
         },
         output: {
-          structured: {},
+          structured: { answer: "HELLO" },
           content: [
             { type: "text", text: "HELLO" },
             { type: "file", source: { type: "data", data: "aGVsbG8=" }, mime: "image/png", name: "result.png" },
@@ -147,7 +147,7 @@ describe("ApplicationTools", () => {
     }),
   )
 
-  it.effect("removes an application tool when its attachment scope closes", () =>
+  it.effect("removes an application tool when its registration scope closes", () =>
     Effect.gen(function* () {
       const applications = yield* ApplicationTools.Service
       const registry = yield* ToolRegistry.Service
@@ -165,11 +165,11 @@ describe("ApplicationTools", () => {
     Effect.gen(function* () {
       const applications = yield* ApplicationTools.Service
       const registry = yield* ToolRegistry.Service
-      const attachmentScope = yield* Scope.make()
-      yield* applications.register({ contextual: contextual([]) }).pipe(Scope.provide(attachmentScope))
+      const registrationScope = yield* Scope.make()
+      yield* applications.register({ contextual: contextual([]) }).pipe(Scope.provide(registrationScope))
       expect((yield* toolDefinitions(registry)).map((tool) => tool.name)).toEqual(["contextual"])
 
-      yield* Scope.close(attachmentScope, Exit.void)
+      yield* Scope.close(registrationScope, Exit.void)
       expect(
         yield* settleTool(registry, {
           sessionID,
@@ -181,7 +181,7 @@ describe("ApplicationTools", () => {
     }),
   )
 
-  it.effect("does not leak an attachment into an already closed scope", () =>
+  it.effect("does not leak a registration into an already closed scope", () =>
     Effect.gen(function* () {
       const applications = yield* ApplicationTools.Service
       const registry = yield* ToolRegistry.Service
@@ -194,13 +194,36 @@ describe("ApplicationTools", () => {
     }),
   )
 
-  it.effect("captures the attached record before later State rebuilds", () =>
+  it.effect("preserves an interrupted application registration until its scope closes", () =>
     Effect.gen(function* () {
       const applications = yield* ApplicationTools.Service
       const registry = yield* ToolRegistry.Service
-      const attached = { stable: contextual([]) }
-      yield* applications.register(attached)
-      Object.assign(attached, { late: contextual([]) })
+      const scope = yield* Scope.make()
+      const registered = yield* Deferred.make<void>()
+      const fiber = yield* applications
+        .register({ interrupted: contextual([]) })
+        .pipe(
+          Effect.andThen(Deferred.succeed(registered, undefined)),
+          Effect.andThen(Effect.never),
+          Scope.provide(scope),
+          Effect.forkChild,
+        )
+      yield* Deferred.await(registered)
+      yield* Fiber.interrupt(fiber)
+
+      expect((yield* toolDefinitions(registry)).map((tool) => tool.name)).toEqual(["interrupted"])
+      yield* Scope.close(scope, Exit.void)
+      expect(yield* toolDefinitions(registry)).toEqual([])
+    }),
+  )
+
+  it.effect("captures the registered record before later State rebuilds", () =>
+    Effect.gen(function* () {
+      const applications = yield* ApplicationTools.Service
+      const registry = yield* ToolRegistry.Service
+      const registered = { stable: contextual([]) }
+      yield* applications.register(registered)
+      Object.assign(registered, { late: contextual([]) })
 
       yield* Effect.scoped(applications.register({ temporary: contextual([]) }))
 
@@ -208,7 +231,7 @@ describe("ApplicationTools", () => {
     }),
   )
 
-  it.effect("settles with the current same-name application tool and restores earlier attachments", () =>
+  it.effect("settles with the current same-name application tool and restores earlier registrations", () =>
     Effect.gen(function* () {
       const applications = yield* ApplicationTools.Service
       const registry = yield* ToolRegistry.Service
diff --git a/packages/core/test/public-tool.test.ts b/packages/core/test/public-tool.test.ts
new file mode 100644
index 000000000..d3f444dd0
--- /dev/null
+++ b/packages/core/test/public-tool.test.ts
@@ -0,0 +1,13 @@
+import { describe, expect, it } from "bun:test"
+import { Tool } from "@opencode-ai/core/public"
+import { Effect } from "effect"
+
+describe("public Tool API", () => {
+  it("keeps the public registration capability narrow", () => {
+    const tools = {
+      register: () => Effect.void,
+    } satisfies Tool.Interface
+
+    expect(Object.keys(tools)).toEqual(["register"])
+  })
+})
diff --git a/packages/core/test/session-runner-tool-registry.test.ts b/packages/core/test/session-runner-tool-registry.test.ts
index 9d23cac4d..7c326a9ca 100644
--- a/packages/core/test/session-runner-tool-registry.test.ts
+++ b/packages/core/test/session-runner-tool-registry.test.ts
@@ -7,7 +7,7 @@ import { SessionMessage } from "@opencode-ai/core/session/message"
 import { ToolOutputStore } from "@opencode-ai/core/tool-output-store"
 import { ToolRegistry } from "@opencode-ai/core/tool/registry"
 import { executeTool, settleTool, toolDefinitions } from "./lib/tool"
-import { Cause, Deferred, Effect, Exit, Fiber, Layer, Option, Schema, Scope } from "effect"
+import { Cause, Deferred, Effect, Exit, Fiber, Layer, Option, Schema, SchemaGetter, SchemaIssue, Scope } from "effect"
 import { testEffect } from "./lib/effect"
 
 const bounds: ToolOutputStore.BoundInput[] = []
@@ -29,6 +29,7 @@ const outputStore = Layer.mock(ToolOutputStore.Service, {
 })
 const registry = ToolRegistry.layer.pipe(Layer.provide(ApplicationTools.layer), Layer.provide(outputStore))
 const it = testEffect(registry)
+const integrated = testEffect(Layer.mergeAll(ApplicationTools.layer, registry))
 const identity = {
   agent: AgentV2.ID.make("build"),
   assistantMessageID: SessionMessage.ID.make("msg_registry"),
@@ -125,6 +126,28 @@ describe("ToolRegistry", () => {
     }),
   )
 
+  it.effect("preserves an interrupted registration until its scope closes", () =>
+    Effect.gen(function* () {
+      const service = yield* ToolRegistry.Service
+      const scope = yield* Scope.make()
+      const registered = yield* Deferred.make<void>()
+      const fiber = yield* service
+        .register({ echo: make() })
+        .pipe(
+          Effect.andThen(Deferred.succeed(registered, undefined)),
+          Effect.andThen(Effect.never),
+          Scope.provide(scope),
+          Effect.forkChild,
+        )
+      yield* Deferred.await(registered)
+      yield* Fiber.interrupt(fiber)
+
+      expect((yield* toolDefinitions(service)).map((tool) => tool.name)).toEqual(["echo"])
+      yield* Scope.close(scope, Exit.void)
+      expect(yield* toolDefinitions(service)).toEqual([])
+    }),
+  )
+
   it.effect("returns model errors without swallowing interruption or defects", () =>
     Effect.gen(function* () {
       const service = yield* ToolRegistry.Service
@@ -237,6 +260,72 @@ describe("ToolRegistry", () => {
     }),
   )
 
+  it.effect("enforces transformed codecs at execution and projection boundaries", () =>
+    Effect.gen(function* () {
+      const service = yield* ToolRegistry.Service
+      const executed: string[] = []
+      const Transformed = Schema.Boolean.pipe(
+        Schema.decodeTo(Schema.String, {
+          decode: SchemaGetter.transform((value) => (value ? "yes" : "no")),
+          encode: SchemaGetter.transform((value) => value === "yes"),
+        }),
+      )
+      yield* service.register({
+        transformed: Tool.make({
+          description: "Transform values",
+          input: Schema.Struct({ value: Transformed }),
+          output: Schema.Struct({ value: Transformed }),
+          execute: ({ value }) => Effect.sync(() => executed.push(value)).pipe(Effect.as({ value })),
+          toModelOutput: ({ output }) => [{ type: "text", text: String(output.value) }],
+        }),
+      })
+
+      expect(
+        yield* executeTool(service, {
+          sessionID,
+          ...identity,
+          call: { type: "tool-call", id: "transformed", name: "transformed", input: { value: true } },
+        }),
+      ).toEqual({ type: "text", value: "true" })
+      expect(executed).toEqual(["yes"])
+      expect(
+        yield* executeTool(service, {
+          sessionID,
+          ...identity,
+          call: { type: "tool-call", id: "invalid-input", name: "transformed", input: { value: "yes" } },
+        }),
+      ).toMatchObject({ type: "error", value: expect.stringContaining("Invalid tool input") })
+      expect(executed).toEqual(["yes"])
+
+      yield* service.register({
+        invalid_output: Tool.make({
+          description: "Return invalid output",
+          input: Schema.Struct({}),
+          output: Schema.Struct({
+            value: Schema.Boolean.pipe(
+              Schema.decodeTo(Schema.String, {
+                decode: SchemaGetter.transform((value) => String(value)),
+                encode: SchemaGetter.transformOrFail((value) =>
+                  value === "valid"
+                    ? Effect.succeed(true)
+                    : Effect.fail(new SchemaIssue.InvalidValue(Option.some(value), { message: "invalid output" })),
+                ),
+              }),
+            ),
+          }),
+          execute: () => Effect.succeed({ value: "invalid" }),
+        }),
+      })
+      expect(
+        yield* executeTool(service, {
+          sessionID,
+          ...identity,
+          call: { type: "tool-call", id: "invalid-output", name: "invalid_output", input: {} },
+        }),
+      ).toMatchObject({ type: "error", value: expect.stringContaining("invalid value for its output schema") })
+    }),
+  )
+
   it.effect("executes the unchanged registration advertised for a provider turn", () =>
     Effect.gen(function* () {
       const service = yield* ToolRegistry.Service
@@ -293,6 +382,38 @@ describe("ToolRegistry", () => {
     }),
   )
 
+  integrated.effect("rejects an application call after a Location override is registered", () =>
+    Effect.gen(function* () {
+      const applications = yield* ApplicationTools.Service
+      const service = yield* ToolRegistry.Service
+      yield* applications.register({ echo: make() })
+      const materialized = yield* service.materialize()
+      yield* service.register({ echo: make() })
+
+      expect((yield* materialized.settle(call("echo"))).result).toEqual({
+        type: "error",
+        value: "Stale tool call: echo",
+      })
+    }),
+  )
+
+  integrated.effect("rejects a Location call after removal reveals an application registration", () =>
+    Effect.gen(function* () {
+      const applications = yield* ApplicationTools.Service
+      const service = yield* ToolRegistry.Service
+      yield* applications.register({ echo: make() })
+      const scope = yield* Scope.make()
+      yield* service.register({ echo: make() }).pipe(Scope.provide(scope))
+      const materialized = yield* service.materialize()
+      yield* Scope.close(scope, Exit.void)
+
+      expect((yield* materialized.settle(call("echo"))).result).toEqual({
+        type: "error",
+        value: "Stale tool call: echo",
+      })
+    }),
+  )
+
   it.effect("keeps captured execution running after registration mutation", () =>
     Effect.gen(function* () {
       const service = yield* ToolRegistry.Service
diff --git a/packages/core/test/session-runner.test.ts b/packages/core/test/session-runner.test.ts
index 1a0692161..4c9c224df 100644
--- a/packages/core/test/session-runner.test.ts
+++ b/packages/core/test/session-runner.test.ts
@@ -2955,6 +2955,22 @@ describe("SessionRunnerLLM", () => {
       expect(yield* session.resume(sessionID).pipe(Effect.catchDefect(Effect.succeed))).toBe("unexpected tool defect")
 
       expect(requests).toHaveLength(1)
+      expect(yield* session.context(sessionID)).toMatchObject([
+        { type: "user", text: "Call defect" },
+        {
+          type: "assistant",
+          content: [
+            {
+              type: "tool",
+              id: "call-defect",
+              state: {
+                status: "error",
+                error: { type: "unknown", message: "Tool execution failed: unexpected tool defect" },
+              },
+            },
+          ],
+        },
+      ])
     }),
   )
 
diff --git a/packages/core/test/state.test.ts b/packages/core/test/state.test.ts
new file mode 100644
index 000000000..cb795f856
--- /dev/null
+++ b/packages/core/test/state.test.ts
@@ -0,0 +1,34 @@
+import { describe, expect } from "bun:test"
+import { State } from "@opencode-ai/core/state"
+import { Deferred, Effect, Exit, Fiber, Layer, Scope } from "effect"
+import { testEffect } from "./lib/effect"
+
+const it = testEffect(Layer.empty)
+
+describe("State", () => {
+  it.effect("commits a transform atomically when its updater is interrupted", () =>
+    Effect.gen(function* () {
+      const rebuilding = yield* Deferred.make<void>()
+      const release = yield* Deferred.make<void>()
+      let block = true
+      const state = State.create({
+        initial: () => ({ values: [] as string[] }),
+        editor: (draft) => ({ add: (value: string) => draft.values.push(value) }),
+        finalize: () =>
+          block ? Deferred.succeed(rebuilding, undefined).pipe(Effect.andThen(Deferred.await(release))) : Effect.void,
+      })
+      const scope = yield* Scope.make()
+      const update = yield* state.transform().pipe(Scope.provide(scope))
+      const fiber = yield* update((editor) => editor.add("registered")).pipe(Effect.forkChild)
+      yield* Deferred.await(rebuilding)
+      const interruption = yield* Fiber.interrupt(fiber).pipe(Effect.forkChild)
+      block = false
+      yield* Deferred.succeed(release, undefined)
+      yield* Fiber.join(interruption)
+
+      expect(state.get().values).toEqual(["registered"])
+      yield* Scope.close(scope, Exit.void)
+      expect(state.get().values).toEqual([])
+    }),
+  )
+})
diff --git a/packages/core/test/tool-bash.test.ts b/packages/core/test/tool-bash.test.ts
index 76e48c0ec..0fb2cd735 100644
--- a/packages/core/test/tool-bash.test.ts
+++ b/packages/core/test/tool-bash.test.ts
@@ -115,7 +115,7 @@ const withTool = <A, E, R>(
   }).pipe(Effect.provide(Layer.mergeAll(registry, bash)))
 }
 
-const call = (input: typeof BashTool.Parameters.Type, id = "call-bash") => ({
+const call = (input: typeof BashTool.Input.Type, id = "call-bash") => ({
   sessionID,
   ...toolIdentity,
   call: { type: "tool-call" as const, id, name: "bash", input },
diff --git a/packages/core/test/tool-edit.test.ts b/packages/core/test/tool-edit.test.ts
index 79777ee24..57a354fc7 100644
--- a/packages/core/test/tool-edit.test.ts
+++ b/packages/core/test/tool-edit.test.ts
@@ -93,7 +93,7 @@ const withTool = <A, E, R>(directory: string, body: (registry: ToolRegistry.Inte
   }).pipe(Effect.provide(Layer.mergeAll(registry, resolution, mutation, edit)))
 }
 
-const call = (input: typeof EditTool.Parameters.Type, id = "call-edit") => ({
+const call = (input: typeof EditTool.Input.Type, id = "call-edit") => ({
   sessionID,
   ...toolIdentity,
   call: { type: "tool-call" as const, id, name: "edit", input },
diff --git a/packages/core/test/tool-glob.test.ts b/packages/core/test/tool-glob.test.ts
index 0bc094fe8..5d838c57b 100644
--- a/packages/core/test/tool-glob.test.ts
+++ b/packages/core/test/tool-glob.test.ts
@@ -91,7 +91,7 @@ const reset = () => {
   result = new LocationSearch.FilesResult({ items: [], truncated: false, partial: false })
 }
 
-const call = (input: typeof GlobTool.Parameters.Type, id = "call-glob") => ({
+const call = (input: typeof GlobTool.Input.Type, id = "call-glob") => ({
   sessionID,
   ...toolIdentity,
   call: { type: "tool-call" as const, id, name: "glob", input },
diff --git a/packages/core/test/tool-grep.test.ts b/packages/core/test/tool-grep.test.ts
index 6dfbd06a7..98437e882 100644
--- a/packages/core/test/tool-grep.test.ts
+++ b/packages/core/test/tool-grep.test.ts
@@ -151,7 +151,7 @@ function provideLive(directory: string, projectReferences = references({})) {
 }
 
 describe("GrepTool", () => {
-  it.effect("registers the grep contribution", () =>
+  it.effect("registers grep", () =>
     Effect.gen(function* () {
       reset()
       expect(yield* toolDefinitions(yield* ToolRegistry.Service)).toMatchObject([{ name: "grep" }])
diff --git a/packages/core/test/tool-output-store.test.ts b/packages/core/test/tool-output-store.test.ts
index 832f709bf..96727ade9 100644
--- a/packages/core/test/tool-output-store.test.ts
+++ b/packages/core/test/tool-output-store.test.ts
@@ -43,7 +43,7 @@ const withStore = <A, E, R>(
 const it = testEffect(Layer.empty)
 
 describe("ToolOutputStore", () => {
-  it.live("bounds aggregate text and structured output with one managed file", () =>
+  it.live("bounds the provider-facing text channel with one managed file", () =>
     withStore(({ store, fs }) =>
       Effect.gen(function* () {
         const first = "HEAD-" + "x".repeat(30_000)
@@ -59,15 +59,9 @@ describe("ToolOutputStore", () => {
             ],
           },
         })
-        expect(result.output.structured).toEqual({})
+        expect(result.output.structured).toEqual({ kind: "report" })
         expect(result.outputPaths).toHaveLength(1)
-        expect(JSON.parse(yield* fs.readFileString(result.outputPaths[0]))).toEqual({
-          structured: { kind: "report" },
-          content: [
-            { type: "text", text: first },
-            { type: "text", text: second },
-          ],
-        })
+        expect(yield* fs.readFileString(result.outputPaths[0])).toBe(first + second)
         if (result.output.content[0]?.type !== "text") throw new Error("expected text preview")
         expect(Buffer.byteLength(result.output.content[0].text)).toBeLessThanOrEqual(ToolOutputStore.MAX_BYTES)
       }),
@@ -79,18 +73,18 @@ describe("ToolOutputStore", () => {
       Effect.gen(function* () {
         const structured = { text: "x".repeat(ToolOutputStore.MAX_BYTES) }
         const result = yield* store.bound({ sessionID, toolCallID: "call-json", output: { structured, content: [] } })
-        expect(result.output.structured).toEqual({})
+        expect(result.output.structured).toEqual(structured)
         expect(result.outputPaths).toHaveLength(1)
-        expect(JSON.parse(yield* fs.readFileString(result.outputPaths[0]))).toEqual({ structured, content: [] })
+        expect(JSON.parse(yield* fs.readFileString(result.outputPaths[0]))).toEqual(structured)
         expect(result.output.content).toHaveLength(1)
       }),
     ),
   )
 
-  it.live("preserves oversized inline media without duplicating its data", () =>
+  it.live("preserves native media and structured metadata without applying a settlement media limit", () =>
     withStore(({ store }) =>
       Effect.gen(function* () {
-        const data = "a".repeat(ToolOutputStore.MAX_BYTES)
+        const data = "a".repeat(6 * 1024 * 1024)
         const result = yield* store.bound({
           sessionID,
           toolCallID: "call-file",
@@ -100,7 +94,7 @@ describe("ToolOutputStore", () => {
           },
         })
         expect(result.outputPaths).toEqual([])
-        expect(result.output.structured).toEqual({})
+        expect(result.output.structured).toEqual({ caption: "pixel" })
         expect(result.output.content).toHaveLength(1)
         expect(result.output.content[0]).toEqual({
           type: "file",
@@ -112,51 +106,38 @@ describe("ToolOutputStore", () => {
     ),
   )
 
-  it.live("rejects inline media beyond the settlement media limit", () =>
-    withStore(({ store }) =>
+  it.live("preserves structured metadata and native media when bounding text", () =>
+    withStore(({ store, fs }) =>
       Effect.gen(function* () {
-        const exit = yield* store
-          .bound({
-            sessionID,
-            toolCallID: "call-file-too-large",
-            output: {
-              structured: {},
-              content: [
-                {
-                  type: "file",
-                  source: { type: "data", data: "a".repeat(ToolOutputStore.MAX_INLINE_MEDIA_BYTES + 1) },
-                  mime: "image/png",
-                },
-              ],
-            },
-          })
-          .pipe(Effect.exit)
-        expect(Exit.isFailure(exit)).toBe(true)
-        if (Exit.isFailure(exit))
-          expect(Option.getOrUndefined(Cause.findErrorOption(exit.cause))?._tag).toBe("ToolOutputStore.MediaLimitError")
+        const text = "x".repeat(ToolOutputStore.MAX_BYTES + 1)
+        const media = {
+          type: "file" as const,
+          source: { type: "data" as const, data: "aGVsbG8=" },
+          mime: "image/png",
+          name: "pixel.png",
+        }
+        const result = yield* store.bound({
+          sessionID,
+          toolCallID: "call-text-and-media",
+          output: { structured: { caption: "pixel" }, content: [{ type: "text", text }, media] },
+        })
+
+        expect(result.output.structured).toEqual({ caption: "pixel" })
+        expect(result.output.content[1]).toEqual(media)
+        expect(yield* fs.readFileString(result.outputPaths[0])).toBe(text)
       }),
     ),
   )
 
-  it.live("rejects inline media whose aggregate size exceeds the settlement limit", () =>
+  it.live("does not double-count structured data duplicated in projected text", () =>
     withStore(({ store }) =>
       Effect.gen(function* () {
-        const exit = yield* store
-          .bound({
-            sessionID,
-            toolCallID: "call-files-too-large",
-            output: {
-              structured: {},
-              content: [
-                { type: "file", source: { type: "data", data: "a".repeat(3 * 1024 * 1024) }, mime: "image/png" },
-                { type: "file", source: { type: "data", data: "b".repeat(3 * 1024 * 1024) }, mime: "image/png" },
-              ],
-            },
-          })
-          .pipe(Effect.exit)
-        expect(Exit.isFailure(exit)).toBe(true)
-        if (Exit.isFailure(exit))
-          expect(Option.getOrUndefined(Cause.findErrorOption(exit.cause))?._tag).toBe("ToolOutputStore.MediaLimitError")
+        const text = "x".repeat(30_000)
+        const output = { structured: { output: text }, content: [{ type: "text" as const, text }] }
+        expect(yield* store.bound({ sessionID, toolCallID: "call-duplicated", output })).toEqual({
+          output,
+          outputPaths: [],
+        })
       }),
     ),
   )
@@ -179,22 +160,14 @@ describe("ToolOutputStore", () => {
     ),
   )
 
-  it.live("fails operationally when output cannot be encoded for bounding", () =>
+  it.live("does not encode ignored structured metadata when projected content exists", () =>
     withStore(({ store }) =>
       Effect.gen(function* () {
-        const exit = yield* store
-          .bound({
-            sessionID,
-            toolCallID: "call-unencodable",
-            output: {
-              structured: { value: 1n },
-              content: [{ type: "text", text: "readable text" }],
-            },
-          })
-          .pipe(Effect.exit)
-        expect(Exit.isFailure(exit)).toBe(true)
-        if (Exit.isFailure(exit))
-          expect(Option.getOrUndefined(Cause.findErrorOption(exit.cause))?._tag).toBe("ToolOutputStore.StorageError")
+        const output = { structured: { value: 1n }, content: [{ type: "text" as const, text: "readable text" }] }
+        expect(yield* store.bound({ sessionID, toolCallID: "call-unencodable", output })).toEqual({
+          output,
+          outputPaths: [],
+        })
       }),
     ),
   )
diff --git a/packages/core/test/tool-read.test.ts b/packages/core/test/tool-read.test.ts
index 4b9ad369a..fa317a00e 100644
--- a/packages/core/test/tool-read.test.ts
+++ b/packages/core/test/tool-read.test.ts
@@ -163,7 +163,7 @@ describe("ReadTool", () => {
         ...toolIdentity,
         call: { type: "tool-call", id: "call-image-settle", name: "read", input: { path: "pixel.png" } },
       })
-      expect(settled.output?.structured).toEqual({})
+      expect(settled.output?.structured).toMatchObject({ type: "binary", mime: "image/png", encoding: "base64" })
       expect(settled.output?.content).toMatchObject([
         { type: "text", text: "Image read successfully" },
         { type: "file", mime: "image/png", source: { type: "data", data: png } },
@@ -194,7 +194,7 @@ describe("ReadTool", () => {
       })
 
       expect(settled.outputPaths).toBeUndefined()
-      expect(settled.output?.structured).toEqual({})
+      expect(settled.output?.structured).toMatchObject({ type: "binary", mime: "image/png", encoding: "base64" })
       expect(settled.result).toEqual({
         type: "content",
         value: [
diff --git a/packages/core/test/tool-webfetch.test.ts b/packages/core/test/tool-webfetch.test.ts
index e971811de..b2541e3e2 100644
--- a/packages/core/test/tool-webfetch.test.ts
+++ b/packages/core/test/tool-webfetch.test.ts
@@ -51,7 +51,7 @@ const reset = () => {
   respond = () => Effect.succeed(new Response("hello", { headers: { "content-type": "text/plain" } }))
 }
 
-const call = (input: typeof WebFetchTool.Parameters.Type, id = "call-webfetch") => ({
+const call = (input: typeof WebFetchTool.Input.Type, id = "call-webfetch") => ({
   sessionID,
   ...toolIdentity,
   call: { type: "tool-call" as const, id, name: "webfetch", input },
@@ -59,7 +59,7 @@ const call = (input: typeof WebFetchTool.Parameters.Type, id = "call-webfetch")
 
 describe("WebFetchTool helpers", () => {
   test("defaults format and rejects invalid timeout controls", () => {
-    const decode = Schema.decodeUnknownSync(WebFetchTool.Parameters)
+    const decode = Schema.decodeUnknownSync(WebFetchTool.Input)
     expect(decode({ url: "https://example.com" })).toEqual({ url: "https://example.com", format: "markdown" })
     expect(() => decode({ url: "https://example.com", timeout: 0 })).toThrow()
     expect(() => decode({ url: "https://example.com", timeout: WebFetchTool.MAX_TIMEOUT_SECONDS + 1 })).toThrow()
@@ -72,7 +72,7 @@ describe("WebFetchTool helpers", () => {
   })
 })
 
-describe("WebFetchTool contribution", () => {
+describe("WebFetchTool registration", () => {
   it.effect("registers and fetches an ordinary hostname HTTP URL without rewriting it", () =>
     Effect.gen(function* () {
       reset()
diff --git a/packages/core/test/tool-websearch.test.ts b/packages/core/test/tool-websearch.test.ts
index da8367ea5..dc38a9c35 100644
--- a/packages/core/test/tool-websearch.test.ts
+++ b/packages/core/test/tool-websearch.test.ts
@@ -18,7 +18,7 @@ const payload = (text: string) =>
 
 describe("WebSearchTool provider selection", () => {
   test("rejects out-of-range numeric controls", () => {
-    const decode = Schema.decodeUnknownSync(WebSearchTool.Parameters)
+    const decode = Schema.decodeUnknownSync(WebSearchTool.Input)
     expect(() => decode({ query: "x", numResults: 0 })).toThrow()
     expect(() => decode({ query: "x", numResults: WebSearchTool.MAX_NUM_RESULTS + 1 })).toThrow()
     expect(() => decode({ query: "x", contextMaxCharacters: WebSearchTool.MAX_CONTEXT_CHARACTERS + 1 })).toThrow()
@@ -122,7 +122,7 @@ const websearch = WebSearchTool.layer.pipe(
 )
 const it = testEffect(Layer.mergeAll(registry, permission, http, websearchConfig, websearch))
 
-describe("WebSearchTool contribution", () => {
+describe("WebSearchTool registration", () => {
   it.effect("registers websearch, asserts query permission, and calls Exa", () =>
     Effect.gen(function* () {
       requests.length = 0
diff --git a/packages/core/test/tool-write.test.ts b/packages/core/test/tool-write.test.ts
index bc44be071..de5c7c264 100644
--- a/packages/core/test/tool-write.test.ts
+++ b/packages/core/test/tool-write.test.ts
@@ -76,7 +76,7 @@ const withTool = <A, E, R>(directory: string, body: (registry: ToolRegistry.Inte
   }).pipe(Effect.provide(Layer.mergeAll(registry, resolution, mutation, write)))
 }
 
-const call = (input: typeof WriteTool.Parameters.Type, id = "call-write") => ({
+const call = (input: typeof WriteTool.Input.Type, id = "call-write") => ({
   sessionID,
   ...toolIdentity,
   call: { type: "tool-call" as const, id, name: "write", input },
diff --git a/specs/v2/tools.md b/specs/v2/tools.md
index a86cf5476..4dc7bfac2 100644
--- a/specs/v2/tools.md
+++ b/specs/v2/tools.md
@@ -5,8 +5,8 @@
 V2 has one opaque type for locally executable tools:
 
 ```ts
-type Tool<Input, Output>
-type AnyTool = Tool<any, any>
+type Definition<Input, Output>
+type AnyTool = Definition<any, any>
 
 const make: <
   Input extends Schema.Codec<any, any, never, never>,
@@ -23,12 +23,12 @@ const make: <
     readonly input: Schema.Type<Input>
     readonly output: Output["Encoded"]
   }) => ReadonlyArray<Tool.Content>
-}) => Tool<Input, Output>
+}) => Definition<Input, Output>
 ```
 
 Application tools, built-ins, and statically authored plugin tools use this same constructor and execution contract.
 
-`Tool` is opaque and has exactly one executor. Its schemas and executor are not public fields. The Tool module privately derives model definitions and interprets invocations for the registry; it never embeds another executable tool representation.
+`Tool.Definition` is opaque and has exactly one executor. Its schemas and executor are not public fields. The Tool module privately derives model definitions and interprets invocations for the registry; callers normally rely on `Tool.make` inference rather than naming the carrier type.
 
 Input and output codecs are self-contained. Schema conversion cannot require services. Tool dependencies are acquired during construction and captured by `execute`.
 
@@ -83,9 +83,9 @@ A Location plugin receives only the narrow `Tools` registration capability, not
 Within one placement:
 
 - The latest active registration for a name wins.
-- Closing a registration removes only that contribution.
-- Closing the winner reveals the next-latest active contribution.
-- Mutating the caller's registration record later does not change the captured contribution.
+- Closing a registration removes only that registration.
+- Closing the winner reveals the next-latest active registration.
+- Mutating the caller's registration record later does not change the captured registration.
 
 Location registrations take precedence over process application registrations.
 
@@ -142,19 +142,19 @@ The Location-scoped registry owns effective lookup and settlement. For each loca
 4. Encodes the returned output with the output codec.
 5. Projects encoded output into model-facing content.
 6. Bounds the complete model-facing output.
-7. Persists the settlement and any internal managed-output references.
+7. Returns the settlement and managed-output references to the runner, which persists them durably.
 
 Invalid input never invokes the tool. Invalid output never produces a successful settlement.
 
 `toModelOutput` is pure and total. When omitted, the encoded output remains structured output; an encoded string is also projected as text. Projection does not receive invocation identity because presentation depends only on validated input and output.
 
-Provider-turn materialization captures the effective registration identity for each advertised name without retaining its handler. Settlement rejects the call as stale if that registration was removed or replaced, including when closing an overlay reveals the previously effective registration. The current handler is captured only after this check; detaching or replacing it afterward does not affect the running invocation.
+Provider-turn materialization captures the effective registration identity for each advertised name without retaining its handler. Settlement rejects the call as stale if that registration was removed or replaced, including when closing an overlay reveals the previously effective registration. The current handler is captured only after this check; removing or replacing its registration afterward does not affect the running invocation.
 
 ## Output Bounding
 
 Tools return complete validated domain output. They do not truncate model-facing output or manage retention files.
 
-After projection, one generic settlement boundary bounds textual and structured provider context. Supported inline media remains native up to the producer's media limit and is never encoded into a text preview. Structured data duplicated by native media content is omitted from provider settlement accounting and storage. Oversized textual or structured values are materialized in managed storage and replaced with bounded previews or references; if complete retention fails, settlement fails operationally rather than publishing lossy success. Managed paths are internal settlement metadata and never appear in `Tool.make`, tool output schemas, or projection callbacks solely for retention bookkeeping.
+After projection, one generic settlement boundary bounds the channel actually sent to the provider. When content exists, only its textual parts are measured; structured metadata is retained unchanged without being double-counted, and native media remains unchanged under producer-owned limits. When content is empty, the structured output is measured. Oversized provider-facing text or structured output is retained in managed storage and replaced with a bounded text preview while structured metadata and media are preserved; if complete retention fails, settlement fails operationally rather than publishing lossy success. Managed paths never appear in `Tool.make`, tool output schemas, or projection callbacks solely for retention bookkeeping.
 
 Model-output bounding is not producer memory management. Processes and streaming sources may need separate capture or spooling limits before a tool result exists. Those limits must be modeled at the producer boundary and must not masquerade as model-output truncation. A producer cannot claim a complete retained output after it has already discarded bytes.
 
@@ -182,3 +182,5 @@ Leaf tools translate only errors they deliberately classify as recoverable. Broa
 ## Follow-Up
 
 Location plugin installation should receive the same narrow `Tools` capability. That requires a separate Location-layer ordering change so built-ins register before plugins without introducing a `PluginBoot -> Tools -> PluginBoot` dependency cycle. The carrier, registrar, and plugin-owned Scope semantics are already suitable; no tool-specific plugin hook is needed.
+
+Session's current public result shape still exposes managed `outputPaths`. Extending storage encapsulation across the public Session API requires a separate opaque managed-output reference design; paths are not entirely internal today.