Would they become as batshit insane as in OTL?
If it's the same ISIS as OTL I'm assuming no. From what I've gathered a big reason groups like ISIS were able to gain so much traction IOTL was the de-Ba'athification programs initiated by the US in Iraq dissolving the military and basically rebuilding the entire government from scratch, which created a power vacuum jihadist groups were more than happy to fill. With no de-Ba'athification and Saddam still in power there are many fewer reasons for disaffected Sunnis to throw their lot in with the jihadists. Obviously said jihadists are still very much a thing ITTL Iraq with Zarqawi & co. gaining influence thanks to the government collaborating with them against Sadr's forces, but I don't see something on the level of OTL ISIS happening
yet.
Saddam is probably cooked in the long run: the Sadrists are holding their own and the US is 100% going to start ramping up support for them. Its' not like OTL Syria where Assad had major international support from Russia and others, Saddam doesn't really have any relevant international allies to object to the US doing everything short of a ground invasion to get rid of him. Granted, without the US launching a full-scale invasion progress is going to be much slower and bloodier. I can see Sadr being able to take control over the territory within the southern no-fly zone, especially with the US turning it into a "no-drive zone" and basically making it impossible for the Iraqi military to conduct operations there. Here's an ethnic map of Iraq in 2000 with the no-fly zones overlaid in red.
I can probably see Western support being sufficient for the Sadrists to take most Shia areas north of the NFZ and crucially, Baghdad. But it's going to be nigh-impossible for the Sadrists to gain ground in the majority-Sunni areas. Keep in mind, the Mahdi Army is an explicitly sectarian militia, I doubt any Sunnis will be chomping at the bit to join them. Even if Baghdad falls I have a feeling that Saddam will just flee to Tikrit or wherever and continue fighting from there. However, Saddam won't live forever, Iwanh has implied that his health is in decline, and when he does kick the bucket Uday is waiting in the wings to take over. Uday being Uday, I doubt the Ba'athist government would last long with him in charge and I can see him getting couped, followed by whatever is left of the Ba'athist government attempting to hammer out a power-sharing agreement with the Sadrists.