Yes, you can upload images to Reddthat when posting, commenting, etc.

We have a CDN In front and aggressively cache all of the images.

3rd party images are fetched to generate a thumbnail, and to cache the image. The problem with this is, catbox can be slow at times and if that happens when you post it can't generate them.
Some clients also only open the direct links instead of showing the cached image, resulting in images not loading, or taking forever to load.

I say if you are posting on Reddthat, I'm happy for people to use the features provided by Reddthat. So upload here, if you so wish.

Just remember that the images you upload are linked to your account.

I can't speak for the performance of your instance & federation but catbox.moe is most often incredibly slow, to the point of being virtually unusable. No idea why it is so popular.

If you point a link to a third party, your instance just stores the link.

If you post directly the instance has to save it, which adds up over time, and everytime someone views that post the instance has to provide it.

Whether or not that traffic is negligible depends on a lot of stuff.

in the meantime I discovered https://imgbb.com/