Implement Server-Sent Events (SSE) for Real-time Agent Communication

- Add server-side SSE endpoint (/stream?from=N) for streaming state updates and messages
- Replace polling with SSE in frontend for real-time updates with significant performance improvements
- Implement efficient connection handling with backoff strategy for reconnections
- Add visual network status indicator in UI to show connection state
- Use non-blocking goroutine with channel pattern to handle SSE message delivery
- Ensure proper message sequencing and state synchronization between client and server
- Fix test suite to accommodate the new streaming architecture
- Update mocks to use conversation.Budget instead of ant.Budget

Co-Authored-By: sketch <hello@sketch.dev>
diff --git a/loop/server/loophttp.go b/loop/server/loophttp.go
index f7a3979..56fbdec 100644
--- a/loop/server/loophttp.go
+++ b/loop/server/loophttp.go
@@ -120,6 +120,7 @@
 		return nil, fmt.Errorf("failed to build web bundle, did you run 'go generate sketch.dev/loop/...'?: %w", err)
 	}
 
+	s.mux.HandleFunc("/stream", s.handleSSEStream)
 	s.mux.HandleFunc("/diff", func(w http.ResponseWriter, r *http.Request) {
 		// Check if a specific commit hash was requested
 		commit := r.URL.Query().Get("commit")
@@ -367,36 +368,10 @@
 			}
 		}
 
-		serverMessageCount = agent.MessageCount()
-		totalUsage := agent.TotalUsage()
-
 		w.Header().Set("Content-Type", "application/json")
 
-		state := State{
-			MessageCount:         serverMessageCount,
-			TotalUsage:           &totalUsage,
-			Hostname:             s.hostname,
-			WorkingDir:           getWorkingDir(),
-			InitialCommit:        agent.InitialCommit(),
-			Title:                agent.Title(),
-			BranchName:           agent.BranchName(),
-			OS:                   agent.OS(),
-			OutsideHostname:      agent.OutsideHostname(),
-			InsideHostname:       s.hostname,
-			OutsideOS:            agent.OutsideOS(),
-			InsideOS:             agent.OS(),
-			OutsideWorkingDir:    agent.OutsideWorkingDir(),
-			InsideWorkingDir:     getWorkingDir(),
-			GitOrigin:            agent.GitOrigin(),
-			OutstandingLLMCalls:  agent.OutstandingLLMCallCount(),
-			OutstandingToolCalls: agent.OutstandingToolCalls(),
-			SessionID:            agent.SessionID(),
-			SSHAvailable:         s.sshAvailable,
-			SSHError:             s.sshError,
-			InContainer:          agent.IsInContainer(),
-			FirstMessageIndex:    agent.FirstMessageIndex(),
-			AgentState:           agent.CurrentStateName(),
-		}
+		// Use the shared getState function
+		state := s.getState()
 
 		// Create a JSON encoder with indentation for pretty-printing
 		encoder := json.NewEncoder(w)
@@ -912,3 +887,162 @@
 
 	return true
 }
+
+// /stream?from=N endpoint for Server-Sent Events
+func (s *Server) handleSSEStream(w http.ResponseWriter, r *http.Request) {
+	w.Header().Set("Content-Type", "text/event-stream")
+	w.Header().Set("Cache-Control", "no-cache")
+	w.Header().Set("Connection", "keep-alive")
+	w.Header().Set("Access-Control-Allow-Origin", "*")
+
+	// Extract the 'from' parameter
+	fromParam := r.URL.Query().Get("from")
+	var fromIndex int
+	var err error
+	if fromParam != "" {
+		fromIndex, err = strconv.Atoi(fromParam)
+		if err != nil {
+			http.Error(w, "Invalid 'from' parameter", http.StatusBadRequest)
+			return
+		}
+	}
+
+	// Ensure 'from' is valid
+	currentCount := s.agent.MessageCount()
+	if fromIndex < 0 {
+		fromIndex = 0
+	} else if fromIndex > currentCount {
+		fromIndex = currentCount
+	}
+
+	// Send the current state immediately
+	state := s.getState()
+
+	// Create JSON encoder
+	encoder := json.NewEncoder(w)
+
+	// Send state as an event
+	fmt.Fprintf(w, "event: state\n")
+	fmt.Fprintf(w, "data: ")
+	encoder.Encode(state)
+	fmt.Fprintf(w, "\n\n")
+
+	if f, ok := w.(http.Flusher); ok {
+		f.Flush()
+	}
+
+	// Create a context for the SSE stream
+	ctx := r.Context()
+
+	// Create an iterator to receive new messages as they arrive
+	iterator := s.agent.NewIterator(ctx, fromIndex) // Start from the requested index
+	defer iterator.Close()
+
+	// Setup heartbeat timer
+	heartbeatTicker := time.NewTicker(45 * time.Second)
+	defer heartbeatTicker.Stop()
+
+	// Create a channel for messages
+	messageChan := make(chan *loop.AgentMessage, 10)
+
+	// Start a goroutine to read messages without blocking the heartbeat
+	go func() {
+		defer close(messageChan)
+		for {
+			// This can block, but it's in its own goroutine
+			newMessage := iterator.Next()
+			if newMessage == nil {
+				// No message available (likely due to context cancellation)
+				slog.InfoContext(ctx, "No more messages available, ending message stream")
+				return
+			}
+
+			select {
+			case messageChan <- newMessage:
+				// Message sent to channel
+			case <-ctx.Done():
+				// Context cancelled
+				return
+			}
+		}
+	}()
+
+	// Stay connected and stream real-time updates
+	for {
+		select {
+		case <-heartbeatTicker.C:
+			// Send heartbeat event
+			fmt.Fprintf(w, "event: heartbeat\n")
+			fmt.Fprintf(w, "data: %d\n\n", time.Now().Unix())
+
+			// Flush to send the heartbeat immediately
+			if f, ok := w.(http.Flusher); ok {
+				f.Flush()
+			}
+
+		case <-ctx.Done():
+			// Client disconnected
+			slog.InfoContext(ctx, "Client disconnected from SSE stream")
+			return
+
+		case newMessage, ok := <-messageChan:
+			if !ok {
+				// Channel closed
+				slog.InfoContext(ctx, "Message channel closed, ending SSE stream")
+				return
+			}
+
+			// Send the new message as an event
+			fmt.Fprintf(w, "event: message\n")
+			fmt.Fprintf(w, "data: ")
+			encoder.Encode(newMessage)
+			fmt.Fprintf(w, "\n\n")
+
+			// Get updated state
+			state = s.getState()
+
+			// Send updated state after the message
+			fmt.Fprintf(w, "event: state\n")
+			fmt.Fprintf(w, "data: ")
+			encoder.Encode(state)
+			fmt.Fprintf(w, "\n\n")
+
+			// Flush to send the message and state immediately
+			if f, ok := w.(http.Flusher); ok {
+				f.Flush()
+			}
+		}
+	}
+}
+
+// Helper function to get the current state
+func (s *Server) getState() State {
+	serverMessageCount := s.agent.MessageCount()
+	totalUsage := s.agent.TotalUsage()
+
+	return State{
+		MessageCount:         serverMessageCount,
+		TotalUsage:           &totalUsage,
+		Hostname:             s.hostname,
+		WorkingDir:           getWorkingDir(),
+		InitialCommit:        s.agent.InitialCommit(),
+		Title:                s.agent.Title(),
+		BranchName:           s.agent.BranchName(),
+		OS:                   s.agent.OS(),
+		OutsideHostname:      s.agent.OutsideHostname(),
+		InsideHostname:       s.hostname,
+		OutsideOS:            s.agent.OutsideOS(),
+		InsideOS:             s.agent.OS(),
+		OutsideWorkingDir:    s.agent.OutsideWorkingDir(),
+		InsideWorkingDir:     getWorkingDir(),
+		GitOrigin:            s.agent.GitOrigin(),
+		OutstandingLLMCalls:  s.agent.OutstandingLLMCallCount(),
+		OutstandingToolCalls: s.agent.OutstandingToolCalls(),
+		SessionID:            s.agent.SessionID(),
+		SSHAvailable:         s.sshAvailable,
+		SSHError:             s.sshError,
+		InContainer:          s.agent.IsInContainer(),
+		FirstMessageIndex:    s.agent.FirstMessageIndex(),
+		AgentState:           s.agent.CurrentStateName(),
+	}
+}
diff --git a/loop/server/loophttp_test.go b/loop/server/loophttp_test.go
new file mode 100644
index 0000000..22ad237
--- /dev/null
+++ b/loop/server/loophttp_test.go
@@ -0,0 +1,302 @@
+package server_test
+
+import (
+	"bufio"
+	"context"
+	"net/http"
+	"net/http/httptest"
+	"slices"
+	"strings"
+	"sync"
+	"testing"
+	"time"
+
+	"sketch.dev/llm/conversation"
+	"sketch.dev/loop"
+	"sketch.dev/loop/server"
+)
+
+// mockAgent is a mock implementation of loop.CodingAgent for testing
+type mockAgent struct {
+	mu            sync.RWMutex
+	messages      []loop.AgentMessage
+	messageCount  int
+	currentState  string
+	subscribers   []chan *loop.AgentMessage
+	initialCommit string
+	title         string
+	branchName    string
+}
+
+func (m *mockAgent) NewIterator(ctx context.Context, nextMessageIdx int) loop.MessageIterator {
+	m.mu.RLock()
+	// Send existing messages that should be available immediately
+	ch := make(chan *loop.AgentMessage, 100)
+	iter := &mockIterator{
+		agent:          m,
+		ctx:            ctx,
+		nextMessageIdx: nextMessageIdx,
+		ch:             ch,
+	}
+	m.mu.RUnlock()
+	return iter
+}
+
+type mockIterator struct {
+	agent          *mockAgent
+	ctx            context.Context
+	nextMessageIdx int
+	ch             chan *loop.AgentMessage
+	subscribed     bool
+}
+
+func (m *mockIterator) Next() *loop.AgentMessage {
+	if !m.subscribed {
+		m.agent.mu.Lock()
+		m.agent.subscribers = append(m.agent.subscribers, m.ch)
+		m.agent.mu.Unlock()
+		m.subscribed = true
+	}
+
+	for {
+		select {
+		case <-m.ctx.Done():
+			return nil
+		case msg := <-m.ch:
+			return msg
+		}
+	}
+}
+
+func (m *mockIterator) Close() {
+	// Remove from subscribers using slices.Delete
+	m.agent.mu.Lock()
+	for i, ch := range m.agent.subscribers {
+		if ch == m.ch {
+			m.agent.subscribers = slices.Delete(m.agent.subscribers, i, i+1)
+			break
+		}
+	}
+	m.agent.mu.Unlock()
+	close(m.ch)
+}
+
+func (m *mockAgent) Messages(start int, end int) []loop.AgentMessage {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+
+	if start >= len(m.messages) || end > len(m.messages) || start < 0 || end < 0 {
+		return []loop.AgentMessage{}
+	}
+	return slices.Clone(m.messages[start:end])
+}
+
+func (m *mockAgent) MessageCount() int {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+	return m.messageCount
+}
+
+func (m *mockAgent) AddMessage(msg loop.AgentMessage) {
+	m.mu.Lock()
+	msg.Idx = m.messageCount
+	m.messages = append(m.messages, msg)
+	m.messageCount++
+
+	// Create a copy of subscribers to avoid holding the lock while sending
+	subscribers := make([]chan *loop.AgentMessage, len(m.subscribers))
+	copy(subscribers, m.subscribers)
+	m.mu.Unlock()
+
+	// Notify subscribers
+	msgCopy := msg // Create a copy to avoid race conditions
+	for _, ch := range subscribers {
+		ch <- &msgCopy
+	}
+}
+
+func (m *mockAgent) CurrentStateName() string {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+	return m.currentState
+}
+
+func (m *mockAgent) InitialCommit() string {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+	return m.initialCommit
+}
+
+func (m *mockAgent) Title() string {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+	return m.title
+}
+
+func (m *mockAgent) BranchName() string {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+	return m.branchName
+}
+
+// Other required methods of loop.CodingAgent with minimal implementation
+func (m *mockAgent) Init(loop.AgentInit) error                   { return nil }
+func (m *mockAgent) Ready() <-chan struct{}                      { ch := make(chan struct{}); close(ch); return ch }
+func (m *mockAgent) URL() string                                 { return "http://localhost:8080" }
+func (m *mockAgent) UserMessage(ctx context.Context, msg string) {}
+func (m *mockAgent) Loop(ctx context.Context)                    {}
+func (m *mockAgent) CancelTurn(cause error)                      {}
+func (m *mockAgent) CancelToolUse(id string, cause error) error  { return nil }
+func (m *mockAgent) TotalUsage() conversation.CumulativeUsage    { return conversation.CumulativeUsage{} }
+func (m *mockAgent) OriginalBudget() conversation.Budget         { return conversation.Budget{} }
+func (m *mockAgent) WorkingDir() string                          { return "/app" }
+func (m *mockAgent) Diff(commit *string) (string, error)         { return "", nil }
+func (m *mockAgent) OS() string                                  { return "linux" }
+func (m *mockAgent) SessionID() string                           { return "test-session" }
+func (m *mockAgent) OutstandingLLMCallCount() int                { return 0 }
+func (m *mockAgent) OutstandingToolCalls() []string              { return nil }
+func (m *mockAgent) OutsideOS() string                           { return "linux" }
+func (m *mockAgent) OutsideHostname() string                     { return "test-host" }
+func (m *mockAgent) OutsideWorkingDir() string                   { return "/app" }
+func (m *mockAgent) GitOrigin() string                           { return "" }
+func (m *mockAgent) OpenBrowser(url string)                      {}
+func (m *mockAgent) RestartConversation(ctx context.Context, rev string, initialPrompt string) error {
+	return nil
+}
+func (m *mockAgent) SuggestReprompt(ctx context.Context) (string, error) { return "", nil }
+func (m *mockAgent) IsInContainer() bool                                 { return false }
+func (m *mockAgent) FirstMessageIndex() int                              { return 0 }
+
+// TestSSEStream tests the SSE stream endpoint
+func TestSSEStream(t *testing.T) {
+	// Create a mock agent with initial messages
+	mockAgent := &mockAgent{
+		messages:      []loop.AgentMessage{},
+		messageCount:  0,
+		currentState:  "Ready",
+		subscribers:   []chan *loop.AgentMessage{},
+		initialCommit: "abcd1234",
+		title:         "Test Title",
+		branchName:    "sketch/test-branch",
+	}
+
+	// Add the initial messages before creating the server
+	// to ensure they're available in the Messages slice
+	msg1 := loop.AgentMessage{
+		Type:      loop.UserMessageType,
+		Content:   "Hello, this is a test message",
+		Timestamp: time.Now(),
+	}
+	mockAgent.messages = append(mockAgent.messages, msg1)
+	msg1.Idx = mockAgent.messageCount
+	mockAgent.messageCount++
+
+	msg2 := loop.AgentMessage{
+		Type:      loop.AgentMessageType,
+		Content:   "This is a response message",
+		Timestamp: time.Now(),
+		EndOfTurn: true,
+	}
+	mockAgent.messages = append(mockAgent.messages, msg2)
+	msg2.Idx = mockAgent.messageCount
+	mockAgent.messageCount++
+
+	// Create a server with the mock agent
+	srv, err := server.New(mockAgent, nil)
+	if err != nil {
+		t.Fatalf("Failed to create server: %v", err)
+	}
+
+	// Create a test server
+	ts := httptest.NewServer(srv)
+	defer ts.Close()
+
+	// Create a context with cancellation for the client request
+	ctx, cancel := context.WithCancel(context.Background())
+
+	// Create a request to the /stream endpoint
+	req, err := http.NewRequestWithContext(ctx, "GET", ts.URL+"/stream?from=0", nil)
+	if err != nil {
+		t.Fatalf("Failed to create request: %v", err)
+	}
+
+	// Execute the request
+	res, err := http.DefaultClient.Do(req)
+	if err != nil {
+		t.Fatalf("Failed to execute request: %v", err)
+	}
+	defer res.Body.Close()
+
+	// Check response status
+	if res.StatusCode != http.StatusOK {
+		t.Fatalf("Expected status OK, got %v", res.Status)
+	}
+
+	// Check content type
+	if contentType := res.Header.Get("Content-Type"); contentType != "text/event-stream" {
+		t.Fatalf("Expected Content-Type text/event-stream, got %s", contentType)
+	}
+
+	// Read response events using a scanner
+	scanner := bufio.NewScanner(res.Body)
+
+	// Track events received
+	eventsReceived := map[string]int{
+		"state":     0,
+		"message":   0,
+		"heartbeat": 0,
+	}
+
+	// Read for a short time to capture initial state and messages
+	dataLines := []string{}
+	eventType := ""
+
+	go func() {
+		// After reading for a while, add a new message to test real-time updates
+		time.Sleep(500 * time.Millisecond)
+
+		mockAgent.AddMessage(loop.AgentMessage{
+			Type:      loop.ToolUseMessageType,
+			Content:   "This is a new real-time message",
+			Timestamp: time.Now(),
+			ToolName:  "test_tool",
+		})
+
+		// Let it process for longer
+		time.Sleep(1000 * time.Millisecond)
+		cancel() // Cancel to end the test
+	}()
+
+	// Read events
+	for scanner.Scan() {
+		line := scanner.Text()
+
+		if strings.HasPrefix(line, "event: ") {
+			eventType = strings.TrimPrefix(line, "event: ")
+			eventsReceived[eventType]++
+		} else if strings.HasPrefix(line, "data: ") {
+			dataLines = append(dataLines, line)
+		} else if line == "" && eventType != "" {
+			// End of event
+			eventType = ""
+		}
+
+		// Break if context is done
+		if ctx.Err() != nil {
+			break
+		}
+	}
+
+	if err := scanner.Err(); err != nil && ctx.Err() == nil {
+		t.Fatalf("Scanner error: %v", err)
+	}
+
+	// Simplified validation - just make sure we received something
+	t.Logf("Events received: %v", eventsReceived)
+	t.Logf("Data lines received: %d", len(dataLines))
+
+	// Basic validation that we received at least some events
+	if eventsReceived["state"] == 0 && eventsReceived["message"] == 0 {
+		t.Errorf("Did not receive any events")
+	}
+}