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Since it says you may convert it and add it to the battle, doesn't that mean 1) you may convert it and 2) you may add it to the battle? So can you decide to just convert it and put it in your territory instead and then block with your other guy?
Also, a converted Madness doesnt die after one turn correct?
Finally, if you have no EC's left, could you add madness into battle? He adds himself to battle by SA, not game rule (defender presenting an EC).