Stream local MCP responses so native elicitation reaches the client

[RhysSullivan]

Fixes #1555.

Native elicitation over the local daemon's HTTP MCP endpoint never reached the client: execute on a policy-gated tool failed with -32001: Request timed out while the session had correctly negotiated elicitation_mode=native and the client's elicitation.form capability.

Cause

apps/local/src/mcp.ts built the Streamable HTTP transport with enableJsonResponse: true. In the MCP SDK that mode stores only a resolveJson callback for the POST — no stream controller or encoder. send() gates every server-to-client write on !enableJsonResponse && stream?.controller, so an elicitation/create raised during a tools/call was dropped on the floor. The buffered response then never resolved, because the tool was blocked waiting on the elicitation that never went out, and the call sat until the client's timeout.

PR #1522 fixed the equivalent routing for Cloudflare; the local host still had the flag.

Fix

Drop enableJsonResponse and use the spec-default SSE streaming, so the reverse request rides the originating tool call's stream. Clients must already accept text/event-stream — the transport rejects a POST that does not — so no client compatibility is lost.

Tests

Adds e2e/local/mcp-native-elicitation.test.ts, a local-target mirror of the existing cloudflare/mcp-native-elicitation.test.ts, covering accept, decline, and cancel. It fails on the parent commit with the reported -32001 timeout and passes with the fix.

• apps/local unit: 71 passed; packages/hosts/mcp: 187 passed
• typecheck, lint, format:check clean
• local/mcp-browser-approve and local/stdio-mcp still pass (same transport, so they were the regression risk)

Notes

• local/toolkits-mcp.test.ts fails with a 500 on this branch, but fails identically on an unmodified tree — pre-existing, unrelated, not addressed here.
• packages/hosts/mcp/src/in-memory-session-store.ts:261 still sets enableJsonResponse: true for the self-host path, which likely has the same bug. Left alone as out of scope; there is no native-elicitation e2e coverage on self-host to prove it either way.

[github-actions]

Cloudflare preview

Torn down — the PR is closed.

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