Alice is a lesbian, and is psychotic, in the clinical sense. She requires psychiatric care and undergoes periodic hospitalization in a mental institution to treat her mental illness. She is not only completely harmless to others, but her condition, which is unrelated to her sexual preferences, renders her pitiable and sympathetic.
Double Subverted: It turns out that she's only trying to woo Stephanie because she's The Mole and is working for Emperor Evulz, who needs the information that Stephanie has.
Alice is insane, but she is not a lesbian. Until she meet her Closet Key, anyway.
Alice ends up Kicking The Morality Pet until she runs away/dies and goes back to just being a psychotic lesbian.
Parodied: Every single lesbian character in the universe is confined to a mental institution.
To be granted entry to the dating pool, Alice acts insane.
Deconstructed: Her insanity leads to homophobia among the cast, who believe that all homosexuals are psychos.
Reconstructed: But they meet a Magical Queer woman who restores their faith in the sanity of homosexuals.
Or perhaps Stephanie, who is a hero, is both perfectly sane and an open lesbian herself, causing the group to understand that not all lesbians are psycho like Alice is.
Zig Zagged: Alice is actually trying to escape from Emperor Evulz and is constructing a plan with Stephanie, but before that can happen, she breaks from the stress and goes truly insane, then Stephanie reveals that she has been working for Master of Destruction all along..
Averted: Everyone in the cast is sane.
Everyone in the cast is insane.
There are no gay characters in the cast.
The cast consists of a Single Gender Species which reproduce hermaphroditically and are therefore incapable of homosexuality.
Enforced: "Well, this country is prejudiced against gays, we don't want to show them in too good a light..."
Alice is in an anime/videogame/name-your-medium-here that covers a lot of fetishes.
Lampshaded: "She's batshit crazy...like every other lesbian I've met. *sigh*"
Alice: "Psycho lesbian? No, I like stabbing people because of the various personality disorders. Being turned on by boobs is incidental and unrelated."
Played For Drama: Alice has fallen in love with Stephanie, but Stephanie's straight. Stephanie is afraid of telling Alice she doesn't swing that way for fear of what her reactionmight be.