It wouldn't be so much insane as gut-knifingly insane.
Even assuming Thatcher gets over the fact that she's just called a snap general election with absolutely no warning to her party, or the country, or anybody - which would be an act of sheer panicky madness, and would be seen as such, and you should never be seen to panic in politics - she then has to enter into negotiation with her own backbenches to get the leadership election cancelled. If they don't, she's stuffed, if they do, (presumably they would have to, albeit effectively under duress; probably a 'we'll leave it until after the result' deal is hammered out) the entire backbench of the party will erupt at this flagrant invasion on the prerogatives of the '22, even above and beyond the usual suspects. The party has just been 'bounced' out of it's traditional right to select who it's leader is in the crudest way possible, and it will be naturally very pissed off at this. (Not to mention the rather pointed fact that all the polls suggest that half of them are going to lose their seats in an election which nobody wanted right now)
Great start to an election campaign; the Prime Minister has just alienated most of her party. Then we have the media with it's constant "Who will be leader of your party after this election, Mrs Thatcher?"-style questions. Along with the above, cue a 1997-style implosion of the campaign as Heseltine supporters take to the airwaves and the right responds in kind. Labour wins with a majority above a hundred. The Tories continue the civil war into opposition. Even years later, Tories are still scratching their heads over how such an electorally successful PM managed to lose her political marbles and her political nerve in such spectacular fashion.