Ditto. (MFS) It's far easier to build and understand the picture that way, but I don't think it matters what you take as your frame of reference, so long as you treat all the forces in a consistent manner:
If you work parallel and perpendicular to gravity, weight is unfactored, thrust, drag and lift all have angular terms (parallel and perpendicular components). if you work parallel and perpendicular to flight path, the thrust, drag, lift are unfactored and weight has an angular term.
Using vertical flight as a thought experiment, the lift requirement reduces as we pitch to vertical flight, which should reduce the induced drag (but not parasite/form drag). However, as much as that is happening, you are also introducing a new retarding component. It's easiset working parallel and perpendicular to the aircraft path to see this as some component of gravity working normal to the path, and some component working paralell (aft) to the path - it's not drag per-se, but it requires additional power to overcome it, just like drag (or at the same power setting you slow down, reducing drag until some point where everything reaches equilibrium).
If you insist on working with reference to the gravity plane, in the climb you have:
Vertically, positive up:
weight (-ve), a component of thrust (+), a component of drag (-) a component of lift (+ve)
Horizontally, positive left:
a component of thrust (+), a component of lift (-ve), a component of drag (-ve)
That's much more complex to understand (draw it!), has the same resultant - you're increasing the -ve components, and have to increast the thrust, (or allow the aircraft to slow until drag reduces to match thrust), in order to have everything balance.
[edit], post appeared while I was posting!