It not even hurt to brand them as crazy and to lock them up in an asylum for the criminally insane.
Like we don't do to common criminals? Gee, you must be thinking of them as something else then, such as a legitimate if hostile power.
That would allow the state to medicate them and in some ways, to make an example out of them.
An example that the Islamic State can point to and say: "See, even our enemies agree that we're not just another gang and are afraid of us!"
Martyrdom? Nope, straight-jacketed and drugged and forced to talk about your feelings. No rewards of heaven for you.
"Our brave fighters are willing to face not only death but humiliation and torture before it! Truly, they shall be blessed and rewarded in Heaven!"
Seriously, stop helping the Islamic State. Stop supporting their story. Every time you suggest a "clever" punishment for them you're supporting their claim of being a Caliphate rather than a criminal gang, thus bringing them closer to victory.
You win a war like this by deciding on what view of reality you want to be commonly accepted, then behaving consistently as if it was. By doing this you're constantly telling a story to everyone you interact with, some of whom will accept it and start repeating it in turn. As the number of converts increases, it eventually reaches the tipping point and becomes the new "default" consensus reality, sweeping even those who originally rejected it in. That's what classic nation-building is about: storytelling. Islamic State is trying to short-circuit the process by baiting foreign powers into lashing out against them, effectively recruiting their enemies to testify for them. Such impatience is a serious weakness, since those foreign powers can as well deny the story. However, given how clumsily Al-Qaeda was handled, they probably thought the risk was worth it.
You know, this kind of basic mechanism should really be covered in elementary education. All our technological and economic might won't help us any more than their muscles and armor helped the dinosaurs if our situational awareness continues being that of a brain the size of a peanut.