You just described Eclipse RCP.

The issue with Eclipse and that approach is the complexity of mixing plugins to do everything, which kills the UX.

When VSCode started, the differentiator from Atom and Eclipse was that the extension points were intentionally limited to optimize the user experience. But with the introduction of Copilot that wasn’t enough, hence the amount of forks.

I think that the Zed approach of having a common protocol to talk with agents (like a LSP but for agents) is much better. The only thing that holds me from switching to Zed is that so far my experience using it hasn’t been that good (it still has many rough edges)

There's actually an ACP that has some traction as well, though I don't think it solves the problem of what the agent can do in vscode: https://agentcommunicationprotocol.dev/introduction/welcome