I've been doing some research (mainly hanging on their subreddit) and I think I have a fairly good idea of how tulpas work and the answers to your questions.

There are a myriad very different things tulpas are described as and thus "tulpas exist in the way people describe them" is not well defined.

There undisputably exist SOME specific interesting phenomena that's the referent of the word Tulpa.

I estimates a well developed tulpas moral status to be similar to that of a newborn infant, late-stage alzheimer's victim, dolphin, or beloved family pet dog.

I estimates it's ontological status to be similar to a video game NPC, recurring dream character, or schizophrenic hallucination.

I estimate it's power over reality to be similar to a human (with lower intelligence than their host) locked in a box and only able to communicate with one specific other human.

It does not seem deciding to make a tulpa is a sign of being crazy. Tulpas themselves seem to not be automatically unhealthy and can often help their host overcome depression or anxiety. However, there are many signs that the act of making a tulpa is dangerous and can trigger latent tendencies or be easily done in a catastrophically wrong way. I estimate the risk is similar to doing extensive meditation or taking a single largeish dose of LSD. For this reason I have not and will not attempt making one.

I am to lazy to find citations or examples right now but I probably could. I've tried to be a good rationalist and am fairly certain of most of these claims.