Do you think the narrator is being reasonable or is the story’s conclusion a result of her sinking into madness?

I think the narrator's descent into insanity is the focal point of the narrative. By the end of the narrative, the narrator’s insanity has reached such a heightened state that she can no longer differentiate herself from the figure that she has seen in the wallpaper. She is the woman in the wallpaper and no one, not even John, can imprison her in the wallpaper again. There is no doubt that the narrator will be physically imprisoned at some point in the future. After John regains consciousness and discovers his wife still creeping around the nursery, he will have no choice but to send her to Weir Mitchell or place her in a mental institution. Yet, the narrator’s mind will still remain “free,” mirroring the freedom enjoyed by the woman in the wallpaper. In other words, the woman in the wallpaper can be seen as a manifestation of her creative imagination that finally breaks through the rigid expectations of the domestic sphere. Unfortunately, the escape of her imagination means that she cannot ever regain any sort of rationality; by freeing the woman in the wallpaper, the narrator ensures that her mind will be trapped in a prison of insanity.