Yeah, I do that too. I just send my mad generals on one suicidal raid after the other, even after they become semi-decent, as insanity is hereditary. I also never keep them in cities. They're a good way of softening up armies a little before the main army advances to complete the job. This way, I get quite a bang for my buck-- I even had a 'Horribly Scarred' madman once. Not that he lasted very much longer after that. :D