fix: Upgrade model to llama3.1:8b-instruct + fix git tool cwd

Change 1: Model Upgrade (Primary Fix)
- Changed default model from llama3.2 to llama3.1:8b-instruct
- llama3.1:8b-instruct is fine-tuned for reliable tool/function calling
- llama3.2 (3B) consistently hallucinated tool output in testing
- Added fallback to qwen2.5:14b if primary unavailable

Change 2: Structured Output Foundation
- Enhanced session init to load real data on first message
- Preparation for JSON schema enforcement

Change 3: Git Tool Working Directory Fix
- Rewrote git_tools.py to use subprocess with cwd=REPO_ROOT
- REPO_ROOT auto-detected at module load time
- All git commands now run from correct directory

Change 4: Session Init with Git Log
- _session_init() reads git log --oneline -15 on first message
- Recent commits prepended to system prompt
- Timmy can now answer 'what's new?' from actual commit data

Change 5: Documentation
- Updated README with new model requirement
- Added CHANGELOG_2025-02-27.md

User must run: ollama pull llama3.1:8b-instruct

All 18 git tool tests pass.

docs/CHANGELOG_2025-02-27.md

@@ -0,0 +1,57 @@
+# Changelog — 2025-02-27
+
+## Model Upgrade & Hallucination Fix
+
+### Change 1: Model Upgrade (Primary Fix)
+**Problem:** llama3.2 (3B parameters) consistently hallucinated tool output instead of waiting for real results.
+
+**Solution:** Upgraded default model to `llama3.1:8b-instruct` which is specifically fine-tuned for reliable tool/function calling.
+
+**Changes:**
+- `src/config.py`: Changed `ollama_model` default from `llama3.2` to `llama3.1:8b-instruct`
+- Added fallback logic: if primary model unavailable, auto-fallback to `qwen2.5:14b`
+- `README.md`: Updated setup instructions with new model requirement
+
+**User Action Required:**
+```bash
+ollama pull llama3.1:8b-instruct
+```
+
+### Change 2: Structured Output Enforcement (Foundation)
+**Preparation:** Added infrastructure for two-phase tool calling with JSON schema enforcement.
+
+**Implementation:**
+- Session context tracking in `TimmyOrchestrator`
+- `_session_init()` runs on first message to load real data
+
+### Change 3: Git Tool Working Directory Fix
+**Problem:** Git tools failed with "fatal: Not a git repository" due to wrong working directory.
+
+**Solution:**
+- Rewrote `src/tools/git_tools.py` to use subprocess with explicit `cwd=REPO_ROOT`
+- Added `REPO_ROOT` module-level constant auto-detected at import time
+- All git commands now run from the correct directory
+
+### Change 4: Session Init with Git Log
+**Problem:** Timmy couldn't answer "what's new?" from real data.
+
+**Solution:**
+- `_session_init()` now reads `git log --oneline -15` from repo root on first message
+- Recent commits prepended to system prompt
+- Timmy now grounds self-description in actual commit history
+
+### Change 5: Documentation Updates
+- `README.md`: Updated Quickstart with new model requirement
+- `README.md`: Configuration table reflects new default model
+- Added notes explaining why llama3.1:8b-instruct is required
+
+### Files Modified
+- `src/config.py` — Model configuration with fallback
+- `src/tools/git_tools.py` — Complete rewrite with subprocess + cwd
+- `src/agents/timmy.py` — Session init with git log reading
+- `README.md` — Updated setup and configuration docs
+
+### Testing
+- All git tool tests pass with new subprocess implementation
+- Git log correctly returns commits from repo root
+- Session init loads context on first message