Hi,

a question about this card:
how does the effect apply to characters with willpower and terror icons ? Do they still come into play insane or just exhausted ?

thanks

They would come into play insane. Their abilities preventing insanity would not apply while in the discard pile, nor while they are insane, so no conflict.

Also as a general rule, "Put into play" overrides other game rules such as willpower, terror icons, etc etc.

Agree. Enter insane. The cards enter flipped, so everything is blanked.