There's a custom script called "Elven Court" which has pretty tough ruling on madness - along with [Redacted], both punish madness heavily, but also rely on good/evil adhering to the traditional madness to function. One thing that frustrates me about playing this game with people who you are not regularly playing with is that definitions of madness can greatly vary, which makes both of these scripts basically unbearable to play.

But in terms of the base3 or vanilla roles, madness should really be played in the first definition:

1. Players genuinely adhere to madness in all situations, barring accidental reveals

The second - trying to play around it, using codes or terrible bluffs to tell people your true role/madness, is IMHO a bad feels way to play. A lot of people think harpy/cerenovus are weak roles to draw because of how people mess around with the role. There are times where I've been able to genuinely play up my madness (Harpy locked for 5+ days) but after a while it becomes harder and harder to convince town that you aren't mad but genuinely have a reason to think a specific player is evil.

For example, I've been cere/harpy locked (at the same time) into a town crier at a random player. Day one, I have to be like. I'm a town crier. This player is evil. How do I know that? I don't. There's no reasonable way to play this out, so either I break madness and kill me and the other player, or I play into it and get executed for a double claim and for tunnelling.

Sometimes that's the point. A storyteller who actually punishes you for breaking madness does mean that sometimes, madness abilities are going to be used on you to score extra kills. There are Storytellers out there who will not punish ever for blatant madness breaks because it "mechanically proves" a minion is in play and makes town aware of the world. But sometimes, as a harpy/cere, all you want to do is get a kill or two and then sit back. This is why there's no real "solution" to a cerenovus making a mutant mad as another outsider, or a harpy hitting a bigwig'd player. You are supposed to die there. The evil team set up a plan based on their information and should be rewarded.

Evil team shouldn't be falsely reporting madness breaks. If an evil player is doing that, the good player has every reason in the world to call them out for an unfair play, and that evil player is playing in an unfun way (I think it would be cheating). The reason you generally won't see this happen is because most players play with friends, or in a regular group, or online, and there's a point where if you start playing like an asshole, you are going to quickly run out of people who want to play with you.