Works fine on a hosted installation, even with local storage (I expected it would not work, but it does !).
A very small bug :
1) Launch Flarum
2) Go to a message
3) Click Reply
4) Click the image upload button.
Nothing happens. I must click a second time to get the select file window.
The bug happens only if step 2) is simple. If you go back and forth in messages, it may not happen. And only just after launching Flarum.
Bug verified on local and web hosted installation.