When the active provider returns a 401/403 that survives its per-provider
credential-refresh attempt (revoked OAuth, blocked/expired key, or an
account pinned to a dead/staging inference endpoint), the conversation
loop now escalates to the configured fallback chain instead of dead-ending.
Before: the generic failover dispatch fired only for {rate_limit, billing};
auth/auth_permanent fell through to 'switch providers manually' advice and
never called _try_activate_fallback(). A user whose primary credential was
broken kept thrashing on the same dead credential every turn — the main
agent appeared 'stuck in fallback mode' while never actually failing over.
This also affected auxiliary tasks (compression, vision, title-gen), since
auto-resolved aux follows the main provider.
After: a persistent auth failure with a configured fallback chain switches
to the next provider (mirroring the rate-limit/billing failover path),
guarded one-shot per attempt by TurnRetryState.auth_failover_attempted.
When no fallback is configured the behavior is unchanged — it falls through
to the existing terminal handling and provider-specific troubleshooting
guidance.
Tests: test_auth_provider_failover.py — 401/403 classify as auth, the
gating condition fires only with a chain present + guard unset, the guard
blocks repeats, and non-auth (500) errors do not trigger auth failover.
run_conversation's inner retry loop tracked recovery state in ~15 scattered
bare booleans (per-provider OAuth refresh guards, format-recovery guards,
restart signals). They are now fields on a single TurnRetryState dataclass the
loop mutates in place (_retry.<flag>), giving the recovery bookkeeping a named,
testable home.
Loop-control vars (retry_count, max_retries, max_compression_attempts) stay as
plain locals — they're while-mechanics, not recovery bookkeeping.
Behavior-neutral: pure local→attribute rewrite of 42 references; kwarg NAMES
preserved (e.g. has_retried_429=_retry.has_retried_429). Live simple + tool
turns OK.
Validation: tests/run_agent/ 1615 passed / 0 failed under per-file process
isolation; new test_turn_retry_state.py pins the field contract.
