I don't know where you get "undeniably" from. I've played Riven more times than I can count, and read the BoA many times also, and I see no insanity there, so yes, I can deny it. I see a man tragically driven by a false belief, I see a father out of touch with his son, I see a man who has done terrible things for reasons that seemed to him good and worthy. I also see a man who speaks lucidly and reasons cogently, who sees what is in front of him, who, taken out of Age 233, deprived of the Art and put anywhere on our world, would be perfectly capable of functioning as a normal if somewhat odd member of society.
Atrus believed he was insane, but then Atrus would have believed someone insane if they had taken two doughnuts when everyone else only had one. Compared to Atrus we're all insane. Bear in mind that that perception will also colour the accounts that are the (IC) primary source for the games. Once again, the actual evidence belies the hearsay account.
I also see no evidence whatsoever that he believed himself to be a god. If you have quotations which bear this out, I'd be interested. He equated the Art to the power of gods, and he pretended to be a god to the people of his Ages. That's not the same thing.
And I think you're wrong on the last point as well. Believing that Gehn was insane puts him in a separate category from the rest of us, the sane people. The logic goes "you would have to be insane to do as he did, and I'm obviously not insane, so it's all right for me to do this because I'm sane." Not all evil acts, not even most of them, are committed by the insane. Terry Pratchett makes this point very well in Small Gods and other books--that the most unspeakable acts in history have been committed by people who were just doing a job, who had families who loved them, who were as normal as you or I.
And speaking as a writer, having Gehn be merely insane diminishes his significance as a character to a vast degree. He's far less interesting if he's just a nutter.