I think this is slightly less of a Cursor bug than a bit of a Windows quirk: Windows searches the current working directory for executables before resorting to the path variable. I imagine a lot of stuff is vulnerable to such an "attack" on Windows.

Yeah, but you can easily mitigate it by searching for the real git in known system locations and using whatever you find there (or allowing the user to configure the path). I believe that's how VSCode does it

Yes, but it's an old known security gotcha people developing for Wintendo have to guard against.

that sounds like Cursor has a bug and vuln on Windows to me