I understand there are options to host local instances of galaxy and even on amazon cloud. Getting the galaxy interface itself to work is relatively easy, thanks to virtual images available on amazon cloud. The hard part is getting exported workflows to work, due to the various hard-coded dependencies that one has to plow through.
In the long term, would there be plans to allow users to expand disk quota on the public Galaxy itself for a fee?
Yes! This is something I'm definitely interested in working on. Here's a trello card you can follow to track the development of this. It isn't a fee you'd pay to us, but you could pay to store your own data in AWS (or Google Cloud Platform), and we'd use it directly from usegalaxy.org.