In the Mastodon default web client and in other micro-blogging clients, you can paste an image directly into a post editing box by right clicking. Halcyon does not support this. Testing with Chrome browser V71.
That's not a bug!
Copy and paste as well as drag and drop for uploads are not implemented currently.
You can already upload pictures by clicking the camera icon below the compose text area.
The upload feature will be completely rewritten allowing this plus uploads of other file types like videos and audios.
The current one isn't very good in general.