refactor: streamlined diff generation output and clarified hashline prompt rules

- Reduced default context lines from 4 to 2 in diff generation.
- Removed leading and trailing ellipsis placeholders from generated diff strings.
- Clarified the destructive nature of the replace operator and added examples in the prompt.

packages/coding-agent/src/edit/diff.ts

@@ -58,7 +58,7 @@ function formatNumberedDiffLine(prefix: "+" | "-" | " ", lineNum: number, conten
  * Generate a unified diff string with line numbers and context.
  * Returns both the diff string and the first changed line number (in the new file).
  */
-export function generateDiffString(oldContent: string, newContent: string, contextLines = 4): DiffResult {
+export function generateDiffString(oldContent: string, newContent: string, contextLines = 2): DiffResult {
 	const parts = Diff.diffLines(oldContent, newContent);
 	const output: string[] = [];
 
@@ -119,8 +119,9 @@ export function generateDiffString(oldContent: string, newContent: string, conte
 					linesToShow = raw.slice(0, contextLimit);
 				}
 
+				// Leading-skip placeholder is omitted: the first emitted line's
+				// number already conveys that earlier lines were trimmed.
 				if (leadingSkip > 0) {
-					output.push(formatNumberedDiffLine(" ", oldLineNum, "..."));
 					oldLineNum += leadingSkip;
 					newLineNum += leadingSkip;
 				}
@@ -143,8 +144,9 @@ export function generateDiffString(oldContent: string, newContent: string, conte
 					}
 				}
 
+				// Trailing-skip placeholder is omitted for the same reason: the
+				// final emitted line's number tells the reader the file continues.
 				if (trailingSkip > 0) {
-					output.push(formatNumberedDiffLine(" ", oldLineNum, "..."));
 					oldLineNum += trailingSkip;
 					newLineNum += trailingSkip;
 				}

packages/hashline/src/prompt.md

@@ -21,13 +21,18 @@ A-B!     delete A..B   (or A! == A..A)
 - **Use `+` for a blank payload line; use `++text` to write a line starting with `+text`.**
 - **Inserts add ONLY the rows you list.** The file's existing newlines around the anchor stay. NEVER tack a trailing `+` blank "for spacing" — it writes a literal blank line into the file, doubling whatever is already there.
 - **A bare `LINE↑`/`LINE↓` with no payload still inserts ONE blank line.** Not a no-op. Omit the op if you want nothing there.
-- **Go small.** Add → `↑`/`↓`; replace → `:`; delete → `!`.
+- **Pick the op for your intent.** Does the anchor's existing content SURVIVE?
+  - Survives + new lines next to it → `↑` / `↓`. Go small: prefer `↑`/`↓` over `:` whenever you can.
+  - Changes in place → `:`
+  - Goes away → `!`
+  When unsure: you wanted `↓`. `:` is destructive — it deletes the anchor line.
 - **Line numbers are frozen references to what you have seen.** Later ops in the same hunk still use original line numbers; they do NOT shift as earlier ops apply.
 </rules>
 
 <common-failures>
 - **NEVER replay past your range.** Stop before B+1; extend B if needed.
 - **Read lines look like replace ops.** `84:content` = "make line 84 content" — and inline content is rejected. Don't echo read-style rows.
+- **`LINE:` from a read is NOT `LINE:` as an op.** Read shows what's there; the op DELETES it. Want to keep what you just read? Use `↑`/`↓`, not `:`.
 - **NEVER fabricate file hashes.** Missing? Re-`read`.
 </common-failures>
 
@@ -60,6 +65,11 @@ A-B!     delete A..B   (or A! == A..A)
 # WRONG — INSERT used to change a line (old line survives)
 1↓
 +const X = "b";
+# WRONG — REPLACE used to add a line (original is silently deleted)
+# intent: keep `const X = "a";`, add `const Y = X;` on the next line
+1:
++const Y = X;
+# `1:` replaces line 1 — `const X = "a";` is gone, breaking `f()` which returns X. Use `1↓` to insert after.
 # WRONG — echoing read-style lines as context before the real op
 1:const X = "a";
 1-2: