"because if someone truly believes a character from a book, play or movie is walking around in their head...that's not sanity. That may be creativity, but it's not sanity."

Rationality and sanity are not the same things. Sanity is a legal term which means the ability to tell right from wrong. Being rational is defined as consistent with or based on or using reason, or having its source in or being guided by the intellect rather than experience or emotion. A mentally ill person can be both sane and rational. Are you saying that in general you feel that there is something wrong with the idea that people might be in touch with "fictional" characters?