Source editor dynamic height behavior causes issues in embedded contexts

Problem Statement

The source editor's dynamic height feature causes usability problems when embedded in forms and other constrained contexts. While MR !214728 (merged) provides a workaround by opting out of this behavior for the AI Catalog Flows Form page, it doesn't address the root cause.

Current Situation

• Workaround implemented in !214728 (merged): Opt-out flag for dynamic height on specific forms
• Root cause remains: The source editor's dynamic height behavior is not context-aware
• Reference: See screen recording in !214728 (merged) description and discussion in note 2927624046

Expected Behavior

The source editor should intelligently handle dynamic height based on its embedding context:

• Detect when it's embedded in constrained containers (forms, modals, sidebars)
• Automatically adjust height behavior to prevent layout issues
• Provide sensible defaults that work across different use cases

Proposed Solution

Investigate and implement one or more of the following:

1. Context-aware height management: Detect parent container constraints and adjust behavior automatically
2. Improved default configuration: Make the opt-out unnecessary by improving default behavior
3. Container query support: Use modern CSS container queries to adapt to available space
4. Better API design: Provide clearer configuration options for different embedding scenarios

Related Issues/MRs

• !214728 (merged) - Temporary workaround for AI Catalog Flows Form