Just watch the battle again. He laughs several times during the battle. Watch ROTS and read the novel. The movie shows him laughing and the book says that Yoda had no chance of winning. They are both G-Canon sources. They both plainly show Yoda being outmatched.
First off, the laughing like a mental patient thing, is George liking the classical evil madman thing. And it's Palpatine happy that he finally gets a chance to fight that little green pest that's annyoed him for the last ten years.
If Palpatine had been able to toy with Yoda, he would kill him instead of toying with him.
Once again again, I'm not saying Palpatine didn't drive Yoda back. I'm saying when some says "Palpatine was toying with Yoda" it is not true.