Thumpalumpacus
Major
I'm sure he is - a former low ranking KGB officer that worked his way up to imperious leader would not happen if his head was full of pixie dust and unicorn droppings.
At this stage in his life, basing our assessment of his grip on reality by his actions thirty years ago may not be accurate. Aging has a way of disconnecting folks from the reality they grew up in, whether that be from onset senile dementia or an inability to adapt to changes as one's views ossify.
That said, I am not sure one way or the other how connected Putin is to reality. That depends on how much of his bullshit he actually believes, and who here can say what that answer is?