I agree. The speaker views the proposition as crazy because they don't support it/disagree with it. The speaker is saying they would never support a proposition that they view as crazy. The speaker says they themselves (the speaker) would have to be crazy to support the proposition. 

So, like Evan said, the meaning of the sentence boils down to "I would never support an idea like this."

To me personally, I feel like "Quite honestly, I'd have to be out of my mind to sanction such a crazy proposition" sounds a little more natural.

This seems to be another way of saying that there is no way the speaker would support a certain idea that they strongly disagree with.  "I would never support an idea like this."