He wasn't insane in that he could not think or strategize coherently. He thought differently than most people (to phrase it lightly), but that doesn't excuse his idiocy. As a Caesar, he had a whole lot of power. In real life Maximus would have been butchered and had his body dumped in a ditch, and Commodus would have reported him as having died on an imaginary front line or something.

Oh, and in response to the above comment saying "he had to fight Maximus in the arena because Maximus was loved by the people, etc.", that's utter ridiculousness and typical SF-F mentality. It's like saying "Lan just HAS to fight Galad before the end, man, he just HAS to! Think about it!!1!" Commodus didn't HAVE to do anything except protect himself, and going against a man like Maximus--even a stabbed Maximus--is so overwhelmingly stupid that it sucks the credibility out of the movie. And that's not even mentioning that CAESAR was just killed, and everyone there carries MAXIMUS out of the arena! FUCKING RETARDED! No way, no chance, no how.