(SPOILERS)
My personal theory is he was mentally unstable to begin with, maybe not full blown psychotic, but most likely mean and antisocial (even the thought of a cheerful, friendly Kefka is too hideous to contemplate!).
Remember, even if we can write off sadistic madmen in history as due to illness (Caligula and Ivan the Terrible spring to mind) they weren't very friendly even *before* they got ill.
I'm not sure why they added that bit about his mind snapping. Are they saying that if he wouldn't have become a monster if he hadn't gotten infused with Magitek? Or is the Empire and Gestahl more to blame? Kind of like saying that Darth Vader was evil because the Emperor *made* him evil. Maybe the emperor is mainly to blame, but the seeds of evil were there before.
