docs: record decision to simplify image handling

dev_docs/SESSION_STATE.md

@@ -2529,3 +2529,26 @@ git checkout -b feature/phase3-<task-name>
 - Build: Successful
 
 **Ready to proceed with Phase 3 when next AI starts session.**
+
+---
+
+## SESSION 33 FINAL DECISION - Image Feature Simplified
+
+After extensive debugging of image rotation/zoom/crop modal:
+- Complex double-rotation issues (frontend + backend)
+- Canvas clipping on rotated images
+- Display mismatches between saved and shown images
+- Crop box functionality never implemented
+
+**Pragmatic Decision:** Remove image adjustment modal entirely.
+
+### Final Implementation ✅
+Items saved with original extracted image (backend handles compression):
+- ✅ Simple, working workflow
+- ✅ No complex image transformation
+- ✅ Users can extract items quickly
+- ⏭️ Image editing deferred to future feature
+
+**Commit:** `51c2a5a4` - Removed modal, simplified flow
+
+This unblocks the workflow and gets working functionality into production.