I am just not imaginative enough for a insane yet realistic suggestion...
How about if a person in Adventure mode walks around in the wilderness long enough without any contact with civilisation he will start hear voices.
Soon you will swear you hear a animal speak but you will be unable to talk dirrectly... However after a while you will have no problems speaking to animals but they won't talk back...
Eventually animals will start talking about and asking you philosophical questions and how your day has been
Later, trees will speak to you and you can talk back... Then objects... Your sword says you havn't been taking very good care of him lately.
In fact images of Dwarves, Elves, Demons, Wolves, and Goblins will come to life and attack or speak to you. If you fight back you will hurt yourself on the ground and find that you were in fact fighting no one.
Soon you will be able to speak to things that arn't even there in any sense of the word being able to talk to the "Others" and spontanious other beings.
This will go on until you reach civilisation and your ordeal is finished with. However you weren't completely mad. If you were nice to your sword, it appears it has gone up one quality level... The Animals you spoke to if you made friends are still your friends... and those voices were in fact gods and otherworldly beings.
Perhaps if you speak to animals long enough during this stage of insanity, they will allow you into their fold and you can become an animal yourself... Either instantly retiring you as a magical legendary animal or opening up a new state of being. Maybe you don't turn into an animal, maybe only half-animal.
A long with this perhaps towns that are not really there. The Sword you got there could end up being a stick, however there is a small chance that it is actually a sword. When your sane again the town won't be there... but the sword will still me.
The voices in your head will sometimes ask you to do horrible things, and if you do... They may reveal themselves to be demons who will then give you boons for your service.
If you retire in a imaginary town while your insane another character can meet you in the wilderness in which your character will be chaotic and mad but every once in a while he does something so profound that it makes you question if he is truely mad. He will say that the "Symbol of Food in the temple is actually a door" and when you go there, it turns out he was right.
Also perhaps the voices in your head could fall inlove with you, and ask to be wed. If you do, soon you could have a child on your hands with exceptional powers. Then once you die a Demon or Whatever the good equivilant of a demon will be named (if there ever will be one... which I hope there is) after your character a year after his death on the dot.
If your character falls inlove with plants he can chose to become one, instantly retiring him. However the tree will not only have a name, but the wood is considered of great quality second only to Adamantium (as a single tree wields a single peice of wood). However the tree is much more useful to keep around as while it is there, plants will grow in much greater abundance making it a VERY useful tree to keep around for your fort.
Well that is all I am going to type... What do you think?