I think I am kind of with you on how I partition the words in my head. I might refer to myself as "crazy" or to my "crazymeds", but I find it worse when people refer to a person with a mental illness as crazy or insane (unless they are referring to themselves), because it implies something about them that is unlikely to be true. I have a mental illness. Most people (including myself) would consider me "sane" in the colloquial sense. I think because in my general experience (and, you know, the actual facts bear this out), people with mental illnesses do not act the way they are portrayed in media, nor the way characters that are generically "crazy" do, I have delineated a difference between "mentally ill" and "crazy". I think there's a lot more damage done by the media portrayal of specific diagnoses, or asylums full of "gibbering lunatics" than by referring to something over-the-top bizarre as "crazy" (but I can also see where they're connected). A "mad scientist" is, well, mad, crazy, insane - they're also not real, and not diagnosable (have there been "mad scientists" in real life? Yes, but most of them probably were not mentally ill).

But, like I said above, I will refrain from using words that other people find hurtful.