Jesus CHRIST I had to respond to this because of the ignorance of the situation being unanswered

The reason Kefka was both insane AND evil is because

1. He was Gestahl's loyal court jester. He whether he was planning to betray Gestahl is unclear at the time.

2. Kefka offered his services as a test subject for magitek infusion. He became a prototype to magic infusion to help further it's progress. He probably got closer than anyone else to surviving it. But, it also made him mentally ill.

3. Kefka was probably already hatefilled since he was already working for the Empire. However, I'm sure over time, that mental illness became worse and worse. Gestahl probably didn't accept or acknowledge it. He continued to wage his war.

So yes, there is a reason he's evil.