Insight with CLM 5.0

Hello
Yes, Rational Insight is a separate licensed software application. With CLM 5.0, using Insight would constitute a replacement for using RRDI.  RRDI has some COGNOS components such as Query and Report studio.
However, there are differences between the two reporting solutions some of which you noted in your question.

Choosing Insight requires a migration process. Here is some information to get started with the planning.
RRDI and Insight Overview
Upgrading RRDI to Insight
Upgrading reporting artifacts which contains the section below.

Updating ETL and reporting resources for Rational Insight

If you have just upgraded Rational Reporting for Development Intelligence to Rational Insight, you must complete your upgrade by integrating the CLM ETL and reporting artifacts with Rational Insight. For detailed instructions, see Integrating the Collaborative Lifecycle Management ETL and reporting artifacts to Rational Insight

Rational Insight 1.1.1.4 corresponds to the CLM 5.0 release - https://jazz.net/downloads/rational-insight/releases/1.1.1.4.   You can think of Insight as a more configurable version of RRDI.  It has the same foundation as RRDI, as well as the development tools like Framework Manager and Data Manager that allow you to customize your reporting installation.