Upgrade Vitest toolchain to v4.x and resolve @vitest/coverage-v8 peer dependency conflict

[emresurmeli]

Summary

Dependabot PR #439 updates @vitest/coverage-v8 from 3.2.4 to 4.0.3. The install fails because the new version requires Vitest 4.x, while we are still on Vitest 3.x. We need to plan and execute a coordinated upgrade of all Vitest-related packages (core, UI, coverage, configs), accounting for the breaking changes introduced in Vitest 4.

Reproduction Steps

1. Check out main.
2. Apply the dependency change from PR NEEDS WORK: chore(deps-dev): bump @vitest/coverage-v8 from 3.2.4 to 4.0.3 in /libraries/js #439.
3. Run npm install in libraries/js.

Observed Error

npm ERR! peer vitest@"4.0.7" from @vitest/coverage-v8@4.0.7
npm ERR! node_modules/@vitest/coverage-v8
npm ERR!   dev @vitest/coverage-v8@"^4.0.3" from the root project

Expected vs Actual

• Expected: Dependencies install cleanly and CI succeeds.
• Actual: Installation fails with a peer dependency conflict, blocking CI.

Additional Context

Vitest 4 introduces breaking changes—removal of the basic reporter, simplified exclude patterns, config type updates (UserConfig → ViteUserConfig), and dropping Vite 5 support. We need to update our configuration and scripts accordingly before accepting the coverage plugin upgrade. (Reference the Vitest 4 release notes cited in PR #439.)

Proposed Plan

• Review the Vitest 4 migration guide and release notes.
• Upgrade vitest, @vitest/ui, @vitest/coverage-v8, and any related tooling to compatible 4.x versions.
• Update configuration files (coverage settings, reporters) to match the new API.
• Run pipeline checks (lint, build, test, coverage) and adjust scripts as needed.
• Document any follow-up tasks (e.g., changes required across other packages).
• Merge the upgrade once all checks pass and PR NEEDS WORK: chore(deps-dev): bump @vitest/coverage-v8 from 3.2.4 to 4.0.3 in /libraries/js #439 is unblocked.

Tasks

• Audit Vitest usage across libraries/js (and other packages if applicable) for deprecated options.
• Update dev dependencies to Vitest 4.x and regenerate lockfiles.
• Adjust testing/coverage configuration per Vitest 4 migration notes.
• Validate local workflows: npm run lint, npm run test, npm run build, coverage reports.
• Ensure CI succeeds and unblock PR NEEDS WORK: chore(deps-dev): bump @vitest/coverage-v8 from 3.2.4 to 4.0.3 in /libraries/js #439.
• Communicate any developer-facing changes (new reporter names, CLI options, etc.).

References

• Dependabot PR attempting the coverage upgrade: #439