diff --git a/.agents/scripts/supervisor-helper.sh b/.agents/scripts/supervisor-helper.sh
index 3b1a705e4..69c631c7b 100755
--- a/.agents/scripts/supervisor-helper.sh
+++ b/.agents/scripts/supervisor-helper.sh
@@ -245,6 +245,7 @@ readonly VALID_STATES="queued dispatched running evaluating retrying complete pr
 # shellcheck disable=SC2034 # Used by supervisor/state.sh
 readonly -a VALID_TRANSITIONS=(
 	"queued:dispatched"
+	"queued:blocked"
 	"queued:cancelled"
 	"dispatched:running"
 	"dispatched:failed"
diff --git a/.agents/scripts/supervisor/dispatch.sh b/.agents/scripts/supervisor/dispatch.sh
index df035d21b..67855eb3b 100755
--- a/.agents/scripts/supervisor/dispatch.sh
+++ b/.agents/scripts/supervisor/dispatch.sh
@@ -1528,14 +1528,16 @@ check_dispatch_dedup_guard() {
 	local cooldown_secs="${SUPERVISOR_FAILURE_COOLDOWN_SECS:-600}" # 10 minutes default
 	local max_consecutive="${SUPERVISOR_MAX_CONSECUTIVE_FAILURES:-2}"
 
-	# Rule 2: Block after max_consecutive identical failures
+	# Rule 2: Cancel after max_consecutive identical failures
+	# Note: queued->blocked is not a valid transition; use cancelled instead.
+	# The task can be manually re-queued after investigation.
 	if [[ "$consecutive_count" -ge "$max_consecutive" ]]; then
 		local block_reason="Dispatch dedup guard: $consecutive_count consecutive identical failures (error: ${last_error:-unknown}) — manual intervention required (t1206)"
-		log_warn "  $task_id: BLOCKED by dedup guard — $consecutive_count consecutive identical failures with error '${last_error:-unknown}'"
-		cmd_transition "$task_id" "blocked" --error "$block_reason" 2>/dev/null || true
+		log_warn "  $task_id: CANCELLED by dedup guard — $consecutive_count consecutive identical failures with error '${last_error:-unknown}'"
+		cmd_transition "$task_id" "cancelled" --error "$block_reason" 2>/dev/null || true
 		update_todo_on_blocked "$task_id" "$block_reason" 2>/dev/null || true
-		send_task_notification "$task_id" "blocked" "$block_reason" 2>/dev/null || true
-		store_failure_pattern "$task_id" "blocked" "$block_reason" "dispatch-dedup-guard" 2>/dev/null || true
+		send_task_notification "$task_id" "cancelled" "$block_reason" 2>/dev/null || true
+		store_failure_pattern "$task_id" "cancelled" "$block_reason" "dispatch-dedup-guard" 2>/dev/null || true
 		return 1
 	fi
 
diff --git a/.agents/scripts/supervisor/todo-sync.sh b/.agents/scripts/supervisor/todo-sync.sh
index 37dccfb56..f2ede6642 100755
--- a/.agents/scripts/supervisor/todo-sync.sh
+++ b/.agents/scripts/supervisor/todo-sync.sh
@@ -1693,7 +1693,7 @@ cmd_reconcile_db_todo() {
 				else
 					log_info "Phase 7b: Transitioning $tid from $tstatus to complete (TODO.md shows [x])"
 					cmd_transition "$tid" "complete" \
-						--reason "Reconciled: TODO.md marked [x] but DB was $tstatus (t1001)" \
+						--error "Reconciled: TODO.md marked [x] but DB was $tstatus (t1001)" \
 						2>>"${SUPERVISOR_LOG:-/dev/null}" || {
 						log_warn "Phase 7b: Failed to transition $tid to complete"
 						continue
@@ -1874,7 +1874,7 @@ cmd_reconcile_queue_dispatchability() {
 			else
 				log_info "Phase 0.6: $tid queued in DB but [x] in TODO.md — transitioning to complete"
 				cmd_transition "$tid" "complete" \
-					--reason "Reconciled: TODO.md marked [x] but DB was queued (t1180)" \
+					--error "Reconciled: TODO.md marked [x] but DB was queued (t1180)" \
 					2>>"${SUPERVISOR_LOG:-/dev/null}" || {
 					log_warn "Phase 0.6: Failed to transition $tid to complete"
 					continue
@@ -1891,7 +1891,7 @@ cmd_reconcile_queue_dispatchability() {
 			else
 				log_info "Phase 0.6: $tid queued in DB but [-] in TODO.md — cancelling"
 				cmd_transition "$tid" "cancelled" \
-					--reason "Reconciled: TODO.md marked [-] but DB was queued (t1180)" \
+					--error "Reconciled: TODO.md marked [-] but DB was queued (t1180)" \
 					2>>"${SUPERVISOR_LOG:-/dev/null}" || {
 					log_warn "Phase 0.6: Failed to cancel $tid"
 					continue
@@ -1950,7 +1950,7 @@ cmd_reconcile_queue_dispatchability() {
 			else
 				log_warn "Phase 0.6: $tid queued in DB but not dispatchable in TODO.md — cancelling phantom entry"
 				cmd_transition "$tid" "cancelled" \
-					--reason "Reconciled: queued in DB but TODO.md has no #auto-dispatch tag or Dispatch Queue entry (t1180)" \
+					--error "Reconciled: queued in DB but TODO.md has no #auto-dispatch tag or Dispatch Queue entry (t1180)" \
 					2>>"${SUPERVISOR_LOG:-/dev/null}" || {
 					log_warn "Phase 0.6: Failed to cancel phantom $tid"
 					continue