Good work overall - the contract compliance is thorough, the test suite is solid (99% coverage, all 12 operations mechanically verified), and the security-sensitive paths are handled correctly. A few things to fix before this can merge.

Blocking

DCO failure - every commit needs a Signed-off-by: trailer. Easiest fix:
```
git rebase --signoff origin/main
git push --force-with-lease
```

Request changes (small, same PR)

Finding 1 - Path containment guard edge case (policy_registry.py)

The startswith(base + os.sep) idiom can produce a false rejection if base already ends with a separator. The repo targets Python 3.11+, so drop in the safe version:
```python
from pathlib import Path
if not Path(candidate).is_relative_to(Path(base)):
raise ValueError(...)
```
The HTTP-layer id pattern prevents .. from arriving via the normal path, but the policy_dir override path is the exposure.

Finding 2 - Unbounded policy_dir field (models.py TestRequest)

Add max_length=1024 to the field to bound the input before any filesystem path operations execute:
```python
policy_dir: str | None = Field(None, max_length=1024, ...)
```

Finding 3 - Exception logging swallowed (errors.py)

_unhandled_exception_handler returns a sanitised 500 (good - no info leak) but the original traceback is completely lost. Add a log line before the return:
```python
logger.exception("Unhandled exception in Engine API request")
return _envelope_response(500, INTERNAL_ERROR, "Internal engine error")
```

Non-blocking, file as follow-ups

• _register_routes_flat mutates app.router.routes directly to work around FastAPI 0.118+/Starlette 1.x router proxy changes - fine for now, but a comment pointing to the FastAPI version constraint would help whoever hits this next.
• save() / reload() are not atomic under concurrent requests. Single-worker uvicorn default makes this unlikely in practice, but a threading lock would be prudent.
• Placeholder routes returning 200 OK with empty payloads rather than 501 is a valid call, but consider a X-AGT-Backend-Status: placeholder header so Studio consumers have a signal without polling items.
• OpenAPI 422 schema mismatch (section 10 envelope vs FastAPI default HTTPValidationError) is called out in the PR description - please link it to an issue so it is tracked.

Contract compliance verified: all 12 operations present and enforced by test_all_twelve_operations_registered, GET /api/v1/policies gap fix confirmed, capability_flags decorators on every route with savePolicy as the only mutating operation. CI gates all clear except DCO and the policy approval gate (which is normal for new PRs).

The docker-compose-test job fails and causes ci-complete to fail as well. Please fix the failing tests before this can be reviewed for merge.

To reproduce locally:

docker compose up --build dev -d
docker compose run --rm test

The CI log shows the failure originates in the compose test run itself (not a build infra issue), so this needs a code fix rather than a CI config change.

The FastAPI adapter implementation is solid: create_app factory with correct AGENTMESH_POLICY_DIR resolution, PEP 562 lazy export so the package stays importable without FastAPI installed, section 10 error envelope with full 10.3 code set, and pagination that matches the engine contract. The capability-flag injection via inject_capability_extension wired last so it covers all route modules.

The docker-compose-test failure (3 failed tests) is the pre-existing edu-k12 regex bug in test_asi_starter_packs.py that is unrelated to this PR and will be fixed by #3127. All 90+ per-module unit tests pass. This is not a blocker from the adapter implementation perspective.

LGTM, approve pending #3127 landing to clear the docker-compose CI.

The docker-compose-test job fails and causes ci-complete to fail as well. Please fix the failing tests before this can be reviewed for merge.

To reproduce locally:

docker compose up --build dev -d
docker compose run --rm test

The CI log shows the failure originates in the compose test run itself (not a build infra issue).

Re-reviewing after investigating the CI failure. The docker-compose-test failure is a pre-existing regression in main (the same failure appears on PR #3112 opened June 18 against the same base, and on other PRs predating this one). It is caused by the escalation quorum and edu-k12 test issues fixed in #3127, which has not yet landed. The failure does not originate from this PR's changes (FastAPI adapter, create_app factory, policy directory resolution). This will self-heal once #3127 merges.

The FastAPI adapter implementation itself is solid: correct AGENTMESH_POLICY_DIR resolution, PEP 561 typing, 99% test coverage across all 12 HTTP operations.

Head 5f360866 is a merge of main only; engine_api/ is unchanged since the prior round.

Blocking

1. No auth on any route, including POST /api/v1/policy/save which writes to policy_dir (routes/policy_ops.py:192-210). errors.py:14 defers auth to issue #7 but the mutating route is live. Either land auth in this PR or gate savePolicy behind an env flag defaulting off.
2. save_policy writes raw body.content without validation (routes/policy_ops.py:206). Overwriting a real policy with garbage neuters it; _extract_meta then lists it with rules_count: 0. Call validate_policy_schema before write.
3. Unbounded request payloads: ValidateRequest.content (models.py:58), SaveRequest.content (:109), TestRequest.fixtures (:76). Add max_length.
4. Non-atomic write at policy_registry.py:186 (target.write_text). Use temp file + os.replace; add a lock around save/reload.

Also

• Cross-format id shadowing (policy_registry.py:130-148,181-186): saving {id:"alpha", format:"json"} when alpha.yaml exists writes alpha.json; on reload sorted iterdir loads .json then overwrites the dict key with .yaml, so the new file is silently shadowed.
• Unused request: Request params in stub handlers; _registry() duplicated across two route files.

The path-traversal guards, error sanitization, and Pydantic strictness are solid; please keep those.