The best explanation I can come up with is this: Throughout the "Public Enemies" storyline, Luthor was using a mixture of liquid Kryptonite and Venom (the same Venom that Bane once used) to enhance his strength. In issue #6, Batman notes that Venom has been known to cause mild cases of insanity. Or something to that effect.
In other words, Luthor's erratic behavior was due to drug use.
