chore: document Cursor model name validation workaround

Explain mlx-openai-server served-model-name alias when HF ids are rejected.

Co-authored-by: Cursor <cursoragent@cursor.com>

docs/dev/local-mlx-cursor.md

@@ -175,7 +175,7 @@ Official server docs: [`mlx_lm/SERVER.md`](https://github.com/ml-explore/mlx-lm/
 4. Set:
    - **Base URL:** `http://127.0.0.1:8080/v1` (the `/v1` suffix is required)
    - **API key:** any non-empty string (e.g. `local`)
-5. **Add model** — paste the exact id from `/v1/models`, e.g. `mlx-community/Qwen2.5-Coder-32B-Instruct-4bit`.
+5. **Add model** — see [If Cursor says “Model name is not valid”](#if-cursor-says-model-name-is-not-valid) below (often **not** the raw Hugging Face id).
 6. Click **Verify** if available.
 7. In **Chat** (Cmd+L), select that model from the dropdown.
 
@@ -191,9 +191,55 @@ cloudflared tunnel --url http://127.0.0.1:8080
 
 Set Cursor’s base URL to the tunnel URL with `/v1` appended (e.g. `https://….trycloudflare.com/v1`).
 
-### If Cursor rejects long model names
+### If Cursor says “Model name is not valid”
 
-Use the id returned by `/v1/models` exactly. If the UI still fails, try **[`mlx-openai-server`](https://github.com/cubist38/mlx-openai-server)** with a short `--served-model-name`, or temporarily test with a smaller 7B model id.
+This is **not** an MLX problem. Your server can return the correct id in `/v1/models` (e.g. `mlx-community/Qwen2.5-Coder-32B-Instruct-8bit`) while **Cursor still refuses to add it** — recent Cursor builds validate custom model names against an internal catalog before any request is sent. Slashes, `mlx-community/…`, and most Hugging Face repo ids fail with:
+
+```text
+Model name is not valid: "mlx-community/Qwen2.5-Coder-32B-Instruct-8bit"
+```
+
+**Workaround (recommended):** run **[`mlx-openai-server`](https://github.com/cubist38/mlx-openai-server)** with a **short alias** Cursor already recognizes, while loading your real weights in the background.
+
+Requires **Python 3.11+** (separate from the Python 3.9 env `uv tool install mlx-lm` uses):
+
+```bash
+uv tool install mlx-openai-server --python 3.12
+```
+
+Stop `mlx_lm.server` if it is on port 8080, then:
+
+```bash
+mlx-openai-server launch \
+  --model-type lm \
+  --model-path mlx-community/Qwen2.5-Coder-32B-Instruct-8bit \
+  --served-model-name gpt-4o-mini \
+  --host 127.0.0.1 \
+  --port 8080
+```
+
+In **Cursor → Models**:
+
+- **Base URL:** `http://127.0.0.1:8080/v1`
+- **Add model:** `gpt-4o-mini` (the alias, not the Hugging Face path)
+
+Verify with curl (should answer using your Qwen weights):
+
+```bash
+curl -s http://127.0.0.1:8080/v1/chat/completions \
+  -H "Content-Type: application/json" \
+  -d '{
+    "model": "gpt-4o-mini",
+    "messages": [{"role": "user", "content": "Reply with exactly: ok"}],
+    "max_tokens": 16
+  }'
+```
+
+`mlx_lm.server` alone treats the request `model` field as a Hugging Face repo id, so `gpt-4o-mini` **fails** there (404 / “Repository Not Found”). Use `mlx-openai-server` when you need a Cursor-friendly alias.
+
+**Other names to try in Cursor** if `gpt-4o-mini` is blocked on your build: `gpt-4o`, `gpt-4o-mini-2024-07-18`, or lowercase variants (some forum reports: casing matters). The alias must match what you pass in chat **and** what `--served-model-name` exposes on `/v1/models`.
+
+**Ollama equivalent:** `ollama create gpt-4o-mini -f Modelfile` with `FROM qwen2.5-coder:…` — same idea, different runtime ([DEV walkthrough](https://dev.to/yann_ortodoro/running-qwen-25-coder-14b-locally-in-cursor-with-ollama-4436)).
 
 ## 6. Optional: start server on login
 
@@ -303,6 +349,7 @@ First response after cold start may be slow while weights load into memory.
 | Wrong model / 404 | Model name must match `/v1/models` exactly |
 | First request very slow | Normal — one-time load into unified memory |
 | Poor code quality | Use **Instruct** variant; try 8-bit if you have RAM headroom |
+| `Model name is not valid` | Cursor catalog validation — use `mlx-openai-server` + `--served-model-name gpt-4o-mini` (§5) |
 | Cursor Verify fails | Tunnel with `cloudflared` or `ngrok`; use tunnel URL + `/v1` |
 | Agent unreliable | Expected — use local for chat/edits only |