When I was a postgrad, some friends and I used to have a conference game: who could find the weirdest new literary theory. Many branches of theory seem to be concerned with taking the voice of a previously marginalised group and tracing it in works of literature. While feminism and post-colonialism have fairly neutral names, other groups have purposely reclaimed previously derogatory terms to identify themselves. So you have 'queer theory' and 'cripple theory'... and, memorably in one session at Leeds, 'queer cripple theory'. Apparently one scholar posed this question: "Are we queering cripple theory or crippling queer theory?" Even as literary students ourselves, we found this level of navel gazing to be rather amusing.
By now, I am pretty sure that there is a distinct genre of mental health literary theory. I'm not talking about old-fashioned psychoanalytic criticism, but rather about the idea of examining literature through the lens of marginalised characters with mental illness. If such a theory were to be added to existing branches of theory, 'crazy theory' would be as good a name as any. (My own contribution to this genre would be my analysis of Margery Kempe's crying as an articulation of self.)
I've never been 100% sure about the merits of "reclaiming" pejorative words. I'd be happier if words like 'cripple' were banished from our vocabulary; the negative associations are so great and the danger of childhood (and adult) bullying too real for such words ever to be used neutrally. And there's also a danger of hypocrisy: 'it's ok for me to call myself "crazy" but it's offensive for you to call me that'.
I read Arielle's post on this topic today and really like the way that, instead of "reclaiming" the word, she draws our attention to its other, more positive, meanings. Take a look.