Be brutally honest.  My situation for my honors seminar has gotten very complicated to the point that I'm not even sure if I want to do this honors seminar or not.  It would not entail getting honors on my dilploma but the end goal would be getting some kind of prize (in my view, a consolation prize and i'm not sure how competitive it is)

Honestly, let's suppose that I don't get in grad schools this year, would they even care?  I have shitload of research experience and people to back me up that this idea (devised by my advisor who's also the chair and has the final say on honors stuff) is not really worth my sanity.  While I don't have the full information about this deal, my advisor dropped a hint that it would be good for grad schools....  I heard from someone that it's just the experience of being with top students in my major and having other readers to critique my work.

Are honors seminars or even this situation worth the stress?

EDIT: I spoke with my advisor today.  It turns out that it was completely different thing that she feels would be just as impressive as "honors"- an opportunity to be full-funded by an outside source that's very interested in my thesis and wants to support it and she wants to me to tell the grad schools all about this "nomination."  So whoop-dee-do :-)  I did tell her that I had a meltdown and she was just so sorry for being vague about the whole thing but just wanted to make sure it actually can happen before breaking the news to me.  At the end, it'll work out for me for all the best to stick with this especially my advisor is going to make sure that i don't go through hell again after last semester.  Thanks for the comments- I was definitely going to drop it until I hear all about this!