Set up Cursor Cloud dev environment

[bluesHeart]

Summary

Sets up the development environment for the tophumanwriting backend-only Python package (CLI + SDK) and documents non-obvious setup caveats for future cloud agents.

• Adds AGENTS.md with a ## Cursor Cloud specific instructions section.
• Configures a startup update script (creates .venv, installs -e ".[all,rag-faiss]" + pytest).

No application code was modified.

Key setup finding

pip install -e ".[all]" installs Chroma but not FAISS, yet aiwd/citation_bank.py and the default RAG path hardcode import faiss. A plain thw run fails with faiss import failed unless the rag-faiss extra is also installed — so the update script installs .[all,rag-faiss].

Verification

• Installed deps in a Python 3.12 venv; downloaded the ~500 MB semantic ONNX embedder.
• python -m pytest tests/ → 22 passed.
• End-to-end thw run ... --no-llm audited a target PDF against a 3-PDF exemplar library and wrote result.json + report.md (20 sentences scored; detected 12 AI-transition + 19 repetition issues).

thw_e2e_audit_demo.log

_{To show artifacts inline, enable in settings.}