I installed a Digitrax DZ123 in the cab of my grandson's Thomas (HO scale). Plenty of room for this decoder. Just remember to eliminate the little board with the resistors/capacitors on it. They will screw up the DCC signal.
There is room for a larger decoder if you wish. A DH123 will fit as would any similar decoder. All are hard wired types. I don't think there is a 'drop in' decoder available for the Thomas series locos.
Good luck with your project. Our Thomas runs like a watch with his decoder.