Q:

What's meant here by "the sort of lunacy allowed in the gentry"?

In "The Quick One" by G. K. Chesterton, the author was describing a man, saying:

John Raggley was generally regarded as a crank. He was the sort of man who writes letters to the newspaper, which generally do not appear in the newspaper; but which do appear afterwards as pamphlets, printed (or misprinted) at his own expense; and circulated to a hundred waste-paper baskets. He had quarrelled alike with the Tory squires and the Radical County Councils; he hated Jews; and he distrusted nearly everything that is sold in shops, or even in hotels. But there was a backing of facts behind his fads; he knew the county in every corner and curious detail; and he was a sharp observer. Even the manager, a Mr Wills, had a shadowy respect for Mr Raggley, having a nose for the sort of lunacy allowed in the gentry; not indeed the prostrate reverence which he had for the jovial magnificence of Mr Jukes, who was really good for trade, but a least a disposition to avoid quarrelling with the old grumbler, partly perhaps out of fear of the old grumbler’s tongue.

I found that "have a nose for" mean "have a natural ability to find or discover"
So It may be reworded as "because he is good at finding the sort of allowed foolishness in the gentry"
But I still can't get the whole meaning that the author meant!

A:

The phrase "the sort of lunacy allowed in the gentry" is an allusion to the (real or perceived) eccentricity of the English aristocracy, i.e. that eccentricity is more common among the gentry or the aristocrats than among the rest of the population. In fact, a search for eccentric English aristocrats gives quite a lot of results.
For the narrator of Chesterton's story, being an eccentric, a crank or a lunatic is all on the same spectrum of, uh, non-standard mental states. The phrase "allowed in the gentry" implies that aristocrats can exhibit unusual behaviour or express strange ideas without suffering negative consequences (possibly because they don't actively harm anybody), whereas people from lower classes might suffer at least social consequences. (It does not sound as if Raggley's behaviour would lead to being sent to a mental asylum if he hadn't been an aristocrat, though.)
Mr Wills apparently has the ability to detect this sort of eccentricity or crankiness.

A:

The man is obviously a bit nuts.  However, there's a degree of insanity required before you can be institutionalized, and the degree would be higher for people of higher social status (and more clout).
Therefore, having concluded that the man, though lunatic, will not be institutionalized, he regards him with a degree of respect.

