You know that scene from Animal House where the 60's college kids are sitting around smoking a joint, and someone proposes the idea that every electron is a universe, and their minds are all blown? That's a parody, but it also really is what a human mental model refactor looks and feels like. (Both from the outside and the inside. Yes, I'm speaking from personal experience.)

how can you know when you have completed a refactor?

Before you've completed it, other people might think you're annoying because you want to talk about one particular thing a whole lot, and they're waiting for you to get over it. Most likely, you'll roll back some of the changes and make some bug fixes, and you'll stop feeling "whoa" and euphoric, and people will start treating you normally again.

The above answers:

why would a partial refactor be bad for the mind?

Probably good for your mind, but an interruption for your social progress.

Based on my understanding of the learning process, typically you can tell when a refactor is occurring if you go through "Foundational Collapse," meaning that you've learned something that makes almost your entire understanding of the subject - even one that you've known for a while, to fail. This occurs until you are able to rework your entire understanding of the subject to fit the new criteria. This occurs more easily the better you understand the subject in the first place, as long as you understand what is happening and you give your brain an opportunity to contextualize the information.

Since this is done by the DMN instead of working memory, when this occurs I think that the best thing you can do is take a weekend off. When you are learning aggressively, like at a high level university, I imagine that a student will go through several of these a year in various subjects.

I suppose you have an incomplete model where you haven't thought of and understood all of the corner cases.

I don't think you ever 'finish' a refactor! But you get to be able to deal with your everyday without bumping into conflicting information that causes you to have to refactor every day.

I think a partial refactor would be bad because you're working on an inconsistent model, and if it's wildly inconsistent then it can cause you issues, and might not be a complete model.

For example, imagine you just learned that sugar is bad for you! But thats the sum of your new dietary knowledge. So you start going for fatty foods with lots of preservatives. This isn't going to be any better for you. And you'll have to 'refactor' when someone points out your new diet is still bad for you.

Probably not bad, but taxing. Unlearning and re-learning is difficult so it's avoided at the expense of retaining bad habits or knowledge. Like the adage about people getting more stubborn as they age, teaching an old dog new tricks etc.