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I don't think this is a bug and I can't say I really think it makes sense to change it. The context of these two things is different. One is in a menu explicitly labelled "insert image" and thus it's very directly tied to inserting what you're after into the content. "Attach files" is more generic (more than images) and doesn't necessarily imply anything about inserting into the content.

In this sense, it's also really the same as just dragging an image into the editor.

In terms of the buttons, I think you're proposing hiding/disabling them if they've been used, though I don't really see any real advantage to that. Just disadvantages if images are being used as decorative elements and thus repeated (which I have actually seen, including in an issue I was debugging the other day).