As a criminal psychologist, the answer is no. The Joker is NOT legally insane.
I think The Joker is insane. Yes, he is aware of what he's doing and the morality of it. But I would argue that he is also very much detached from it. He's aware of his actions in the way that an actor is aware of his character's actions. He understands them fully, perhaps more so than most other people understand theirs, but they're not real to him.
That sentence is the legal definition of sanity. To be deemed legally insane, you must be unable to understand the nature and quality of their actions and know the difference between right and wrong.
1. Nature and quality of his actions; the Joker understands that he's committing murder. He understands that people will die.
2. Right and wrong; the Joker not only knows the difference, he deliberately SCORNS it and strives to take "right" people and make them do "wrong" things.
Is the Joker a sociopath? Possibly. That's a longer discussion than I'm prepared for at 6am, but the key point here is that sociopaths are not legally insane. Antisocial personality disorder is a mental disorder, but so is depression, bulimia, gender dysphoria, etc. Not everything that qualifies as a mental disorder meets the criteria for insanity. Ted Bundy was a sociopath. He went to prison, not an institution, because the absence of empathy does not preclude you from understanding that you're committing a crime. You don't have to agree that right is right and wrong is wrong to acknowledge that society upholds certain things as "right" and certain things as "wrong." People like Bundy and the Joker are fully aware that they're doing things that are legally and morally "wrong." They don't care, and not caring isn't enough to be deemed insane. You have to be unable to comprehend the existence of those moral standards.
Yes, he IS insane, because despite his, er, anti-social actions, he continually insists that what he's doing is constructive and rational. [Gambol: "You're Crazy" Joker: "I'm not...No I'm Not"] He's not causing harm because he enjoys people's pain (witness his sincere-sounding sympathy to poor Harvey). He either does not understand why he is doing what he is doing ("I'm a dog chasing cars") or he is "sending a message".
I think you're falling prey to the Joker's cunning, here, if you're perceiving his statements to Harvey as "sincere," when that entire conversation was meant to downplay his culpability and emphasize everyone else's, in the interest of manipulating him into a crime spree. "It wasn't hard. Madness, as you know, is a lot like gravity." That in itself - that deliberate destruction and manipulation of Harvey - shows a level of cunning that rules out legal insanity. The Joker absolutely enjoys causing people pain. Knives and not guns, remember? The entire ferry experiment causes serious psychological distress. Shooting the clowns and finding out they're hostages causes psychological distress. He feeds off pain and terror and suffering.
The standard you're using, that he thinks he's being constructive and rational, does not meet a legal definition of insanity. If you choose to accept that widely accepted notions of "right" and "wrong" exist, as the Joker does repeatedly, considering he plays on the morality of his victims, and reject it because you think anarchy is more enjoyable, you're a depraved, but very sane person. If finding violence and murder "constructive" and "rational" is "legally insane," all of the terrorists at Guantanamo should be in mental institutions, because they committed atrocities in the name of furthering their political agenda and consider their actions "constructive." You don't have to AGREE with normal definitions of right and wrong to be sane - you only have to be capable of knowing that you're violating legal and moral standards. You don't have to consider them valid.
As far as the super-sanity goes: it's a very interesting perspective and I tend to find merit in it. The question was legal insanity, however, and not only is super-sanity not a classifiable disorder, but, like sociopathy and depression, it wouldn't meet the insanity criteria even if it was a real diagnosis.
That said, the Joker is talented enough that he could fake a mental illness that qualifies for an insane defense. Paranoid schizophrenia (command hallucinations, the voices made him do it), delusional disorder (grandeur specification, or possibly a Messianic), dissociative identity disorder (multiple personalities), post-traumatic stress disorder (child abuse, though that's a little harder to sell to a jury) - take your pick. He's smart enough to feign any of them. That ability, in my opinion, only makes him more legally sane.
