Probably the better solution if you want it to be quicker but still fairly thorough appears to be to configure reasoning effort instead of thinking budget. It seems to do very well still even on the Low setting; on the Medium setting it can get stuck in loops like 3.6 does.
I think xhigh reasoning effort was an absurd choice for a default, and so was not sorting out the chat template so LM Studio could offer the reasoning effort dropdown.
The only think I could think that'd be better than the --reasoning-budget would bet a budget jitter just in case it really is repeating a pattern and you want to escape it arbitrarily, otherwise yes, it could keep looping if you're always cutting at the wrong time.
Yes, I think I finally have an intuitive sense for that. But surely on a longer prompt it is still better for the final response if the thinking has at least brushed past all of the prompt?
One of the things I witnessed with xhigh is that while the thinking trace starts out intending an overview of the prompt, it actually can go fully down a rabbit hole off one of the first two or three bullet points even when it was seemingly intending not to.
It’s basically a lot like me. Gets sidetracked by the interesting bits.