I don't think Shane was bonkers, I think Shane had the balls and mentality to do what needed to be done in order to see that the group survived and survival is the only thing that matters at this particular point. I understand Dale's and Rick's whole 'we can't lose our humanity' pov but . . . until a cure or a lessening of the walker situation occurs nothing should stand in the way of surviving. Rick's mistake was not shooting the kid when the kid was impaled on the fence. And this coming from someone who really, really disliked Shane at the end of season one. Hmmm, guess I changed my mind there!
Ah well, I figured Shane was going to get knocked off at some point because people had posted that's what happened in the comic. I hope no one posts anymore from the comics cause I don't want to have an inkling . . I want to be surprised by it all.
Actually, I think they pretty clearly attempted to show that Shane was losing it. Look at the scene in the barn before he let the kid go.....the head slapping he did before putting the gun to the kid's head, the panting, I think he was even drooling a bit at one point.....all of that pointed to a man who was losing control of himself. And, of course, his actions afterward pretty much screamed unhinged. Thinking there was any chance of getting away with murdering Rick and returning to the group, after everything that had gone on before, was pretty loopy. The haphazard way he went about it didn't help, either. No, IMO, the writers/director very much were saying that Shane was not entirely in his right mind in this episode (and really, leading up to this one).
Now, Shane wasn't always wrong. I just think the idea was that while he might often know the right answer to a problem, his inability to get others to agree with him, coupled with guilt over killing Otis, coupled with his obsession with Lori, led him to finally snap.