Uuuh...the fact they cut off their arm and replace it with an undead skeletal graft has nothing to do with sanity. It has to do with them linking themselves to the undead. The undead skeletal arm is a symbol, and about this time the palemaster gains even more abilities to summon undead.
In my opinion, and from the numerous sources I researched before I took the class twice, palemasters differ from Necromancers in that undead are more drawn to them, like a soothing presence, then a necromancer who would just bend them to do their bidding.
So we've got people who play in shadows, haunted by visions of the shadow plane. We've got druids that can turn into furry woodland creatures. We've got VAMPIRES that walk around, or walk in front of Radu who doesn't notice them.
So, if one were to cut off their arm and replace it, for one to completely die and BECOME undead by your definition should always be insane.
Sanity is a state of mind, determined not only by what a person does but what they believe in.
If we're going to give insane people an OR, considering what you're saying is they'd naturally be singling themselves out, we should probably hit everyone who's got a combination of -1 wisdom modifier and -1 charisma, as they'd tend to be a little crazy.