Locale-Conditioned Few-Shot Prompting Mitigates Demonstration Regurgitation in On-Device PII Substitution with Small Language Models

Personally Identifiable Information (PII) redaction usually replaces detected entities with placeholder tokens such as [PERSON], destroying the downstream utility of the redacted text for retrieval and Named Entity Recognition (NER) training. We propose a fully on-device pipeline that substitutes PII with consistent, type-preserving fake values: a 1.5 B mixture-of-experts token classifier (openai/privacy-filter) detects spans, a 1-bit Bonsai-1.7B Small Language Model (SLM) proposes contextual surrogates for names, addresses, and dates, and a rule-based generator (faker) handles patterned fields. We report a prompting finding more important than the quantization choice: with naive fixed three-shot demonstrations, the 1-bit SLM regurgitates demonstration outputs verbatim regardless of input; 1.58-bit Ternary-Bonsai-1.7B reproduces byte-identical failures, ruling out quantization as the cause. We fix this with locale-conditioned rotating few-shot demonstrations: a character-range heuristic picks a locale-pure pool and a per-input MD5 hash samples three demonstrations. With the fix, 482/482 unique Bonsai-1.7B calls succeed (no echoes) and produce locale-correct surrogates, although the SLM still copies from a small same-locale demonstration pool - a residual narrowness we quantify. On a 2000-document multilingual corpus, hybrid perplexity (PPL) beats faker in all six locales under a multilingual evaluator (XGLM-564M); length preservation is best-of-three in 4 of 6 locales. On downstream NER (400 train / 100 test, English), redact yields F1=0.000, faker 0.656, original 0.960; on a matched 160/40 subset including hybrid, faker (0.506) outperforms hybrid (0.346) at p < 0.001. We report this as an honest negative finding: SLM surrogates produce more natural text but a less varied training distribution, and downstream NER benefits more from variety than from naturalness.

Tool Attention Is All You Need: Dynamic Tool Gating and Lazy Schema Loading for Eliminating the MCP/Tools Tax in Scalable Agentic Workflows

The Model Context Protocol (MCP) has become a common interface for connecting large language model (LLM) agents to external tools, but its reliance on stateless, eager schema injection imposes a hidden per-turn overhead the MCP Tax or Tools Tax that practitioner reports place between roughly 10k and 60k tokens in typical multi-server deployments. This payload inflates the key-value cache, is associated with reasoning degradation as context utilization approaches published fracture points around 70%, and turns token budgets into a recurring operational cost. We introduce Tool Attention, a middleware-layer mechanism that generalizes the "Attention Is All You Need" paradigm from self-attention over tokens to gated attention over tools. Tool Attention combines (i) an Intent Schema Overlap (ISO) score from sentence embeddings, (ii) a state-aware gating function enforcing preconditions and access scopes, and (iii) a two-phase lazy schema loader that keeps a compact summary pool in context and promotes full JSON schemas only for top-k gated tools. We evaluate on a simulated 120-tool, six-server benchmark whose per-server token counts are calibrated to public audits of real MCP deployments. In this simulation, Tool Attention directly reduces measured per-turn tool tokens by 95.0% (47.3k -> 2.4k) and raises effective context utilization (a token-ratio quantity) from 24% to 91%. End-to-end figures for task success, latency, cost, and reasoning quality are reported as projections derived from the measured token counts combined with published deployment telemetry; they are not measured on live LLM agents, and we mark projected values explicitly throughout. Taken together, the results support a simple thesis: protocol-level efficiency, not raw context length, is a binding constraint on scalable gentic systems. The code for this work is accessible at https://github.com/asadani/tool-attention