OK... so SPOILER ALERT (LOL)...
I don't know about anybody else, but these are mine:
1. Andrew Laeddis (Leo) is crazy, and even though he has a breakthrough in the end, reverts back to his delusion and is lobotomized.
2. Andrew Laeddis is crazy, has a breakthrough, and then FAKES a relapse because he would rather be lobotomized than live with the fact that his wife killed their children and he then murdered her.
3. Teddy Daniels (Leo) is NOT crazy, pretends to have a breakthrough back to the personality the evil Dr. John Cawley tries to convince him is real, and then decides to have the lobotomy because he knows he can't escape.
OK. I agree with 1 and 2 but I think Leo's character is too strong to give up in your third scenario.

