Yes, oaten hay is great for rabbits to eat!
Rabbits can safely be fed oaten hay in unlimited quantities. The RSPCA recommends that hay "should be the main source of fibre in a rabbit or guinea pig's diet as it helps to regulate the gut flora and prevents dental disease as well". Overall, they diet should consist of at least 80% hay with the remainder made up of leafy greens and some treats.
Rabbits can be fussy eaters, so make sure your oaten hay is of high quality, fresh and not dusty or moldy as this will reduce the palatability to your bun and can make them sick.
What about Timothy hay?
Timothy hay is widely grown in America and is readily available in most pet stores in the USA. Unfortunately it does not grow as well in Australia due to our drier climate and different soils. Consequently most of the Timothy in Australia is imported, of poor quality (as it has been packaged for so long) and extremely expensive.
Many sites that recommend Timothy are USA based and do not have any experience with oaten hay as it typically is not grown in America. Do not feel pressured to buy Timothy just because they say so.
Fresh, Australian grown oaten hay is perfect for your bunny.
The best hay for your rabbit is the one that they will eat the most of! There is no sense buying hay they don't eat. With the exception of Lucerne/Alfalfa, a rabbit can eat any hay on the market.