Linky replacer has the options to support the converting of internal links into managed (linky) links. However linky doesn't support interal links and discussions with linky devs I am told that linky will never support internal links.
Basic links such as http://foo.bar/node/123 will work in linky (not 100% sure about editing them) but more complex links with include queries or anchors most of the time will not render correctly. Also in the case of media links, this then causes issues with rendering of these media links.
Out of all the issues which are currently open, they are all to fix issues with interal links which again, linky doesn't support and never will.
For my client we have just turned off the internal links and also make sure that the internal sites is configured correctly as most of the time the editors just cut and post the url from the address bar. Because of this we have added some additional processing on the ::preSave() to convert any internal links from a full url to just a path but I think this is outside the scope of this issue.
Closed: won't fix
2.0
Code