Honestly he always seemed to me to be only a few steps from the abyss in terms of mental stability so not in the least surprised by his development given the more extreme circumstances
Yet I don't find this to be the case.
Radovid is cunning as he is ruthless, but as far as I recall, never has his actions been based on derangement of any sort. His actions have always been to solidify his concentration of power and / or what he believes is the best for Redania (and later the North). Yet he isn't a victim of his ideals to the point that he would commit anything to achieve it, as he showcases in TW1 when he stops "working" with the Order through Salamandra, considering what they are plotting, .
His plans for the destruction of the Lodge is not done due to fear of mages, but the political threat they possess. In one of the endings, where Shilard exposes the mages involvement, Radovid doesn't declare a pogrom, but the detainment of the mages to find the true traitors (which sadly leads to a massacre due to the dragon attack). While he doe state that it is not an undesirable outcome in Loc Muinne, never is it hinted that he sees it proper to have every mage hunted down without trial (since it contradicts the alliance he established with Carduin and what he brought forward earlier).
He doesn't pluck out Philippa's eyes out of mental instability or any of sort, but gave her a chance to submit to the crimes that she had committed (which she of course refuses and tries to lie through her teeth) and is punished for it. It is however true that he finds satisfaction in the act, considering the hatred he feels towards Philippa alone, but pinning it down to him suffering of mental disorder is quite a misunderstanding, especially since he is a calculating political player (something that Philippa states herself), and he is hardly alone in the atrocities committed by individuals in The Witcher.
Radovid is certainly quite a character considering his merciless nature, but mental illness and insanity? Yeah, I don't see the basis for that, unless if current actions brings forward something to solidify it.