I don't really think that the human Titty is unstable/unbalanced/insane in the same way as the heshecat and some of the others. I think, more likely than not, he's a miserable piece of filth who knows he's a miserable piece of filth. He makes up these stories in order to compensate for his other short comings. The fairy tales help him feel like the man he knows he can never really be. He sticks around the DUmp because that is one of the few places with a collection of folks stupid enough to fall for his fabrications. Unfortunately for him, like BSS says, even some of the DUmpsters appears to be seeing the light.