Thanks so much for this!
I updated LM Studio, and it picked up the mlx-lm update required.
After a small tweak to tool-calling in the prompt, it works great with Zed!
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To make the LLMs able to use tools, I had to configure them in the Zed settings like this: https://gist.github.com/hbradio/fa4b456658a8d250e6ccc69ae9b3...
Also, I had to go into LM Studio and increase the max context size for each model I wanted to use in Zed. Otherwise it gives a parsing error on the response. I set it to the max allowable value.
I start LM Studio, start the LM Studio server, then go to Zeds AI config and tell it to connect to LM Studio. I put it in Agent mode, and it seems to work!
I don't know much about temperature, and I didn't use any other system prompt.
Good luck!