When launched via this extension, Sublime Merge fails to open VS Code

[alexchexes]

I've detailed the issue extensively in the official Sublime Merge issue tracker repository because it's unclear where the root of the problem lies:
#1819

In a nutshell:
When Sublime Merge is opened via this "Sublime Merge for VSCode" extension, it fails to open VS Code as a custom editor, despite working fine when launched in the usual ways (such as via a desktop shortcut, from the start menu, or using smerge from the command line).

Sublime Merge seems to have trouble opening VS Code when initiated via this extension. Its console shows no error logs or messages, so it is unclear what is causing the problem. The issue may lie either in how this extension is launching Sublime Merge or with Sublime Merge itself.

• OS: Windows 10 21H2 (LTSC), 19044.3448
• Build: 2083

Screencapture with the problem:
(First, I open Sublime Merge from the desktop shortcut, and VS Code opens as expected. Then, I open it with this extension, and the described problem occurs.)

Code_2023-09-29--20-31-09--202.mp4

[alexchexes]

Hello, any update on considering this issue?