Yes, it is possible, but I would not recommend it. The dictionary files are located in AppData folder if you use the portable version or in %APPDATA%\RealWorld\RWPaint if you have the application installed. The file with Polish dictionary is called 0415.po. It uses the common unix .po file format, but there are important differences. UTF8 encoding must be used.
Translated pair of strings look like:
If the string is not yet translated:
The first line indicates how many times has the string been requested by the application so far. When you are translating from within the application it puts the most often used strings first.
If you have translated a string and it is not yet uploaded to the web server, it looks like:
So, if you translate something in the text file, be sure to add the #! line before the pair of strings. Otherwise it will not be sent to the server and may be lost if someone else translates that string too. Also, to generate the file, you need to turn on the "Translator mode" in the application - otherwise, the untranslated strings won't be in the file.
That said, I would recommend to use the website or the built-in GUI for translation. You do NOT need to wait for next application version if you use either of those. The translated strings are added to the database instantly and you only need to refresh the dictionary within the application (for example by clicking again on language name on the Online page) to get the latest translation from the web.
The quality of the translation is not great, it is all made by volunteers and I have no feasible way to check the quality myself. I have assigned you the "language moderator" role, which gives you the right to change translations made by anyone else.
It is true that the same English word or phrase could be translated differently depending on context. But using the dictionary method, it is would not be trivial to capture the context. And so, I have accepted this limitation reasoning that it is better to have a imperfect existing translation than not having anything at all (which was the case before, when language DLLs were used and no volunteer was able to make them).