I think that Balseraphs and OOs should have some incentive to keep people crazy, so they should have special ways to handle crazy people (and be able to do something with these#%$! lunatics)
- crazy people don't get enraged while in a city with an asylum
- asylums allow the creation of "handlers": crazy people don't get enraged while on the same square as a handler (or maybe you can just give that ability to cultists?)
I don't know the Balseraphs well enough to say what could be appropriate...
As a OO-fanatic I have thought for quite some time that the crazed promotion should be part of a OO mechanic - think of the monstrosities in Lovecraft's stories or of those included in FFH. How about a new promotion named "Nameless Horrors" only available for OO units with the Demon or Undead promotion that gives a unit that attacked you the enraged promotion (or too make it stronger, units that are in the stack of the attacked unit have the chance too get it)? You could even introduce an enhanced version of it that gives the Crazed promotion (both promotions should of course have large requirements like fear for "Nameless Horrors1" and "Nameless Horrors1" for "Nameless Horrors2".)
In Lovecraft's stories those who have been confrontated with the atrocious creatures of the Old Ones at the end of the story turn mad. My proposition IMHO would reflect it quite well.