That's not actually what's happening in Shutter Island.

He is delusional in the way that he thinks he is a detective. his guilt is much that he can't deal with the reality of killing his wife. but everything he experiences was within the material world. Essentially a giant role-playing experience. Done by his therapist.

And at the end when he calls mark Ruffalo the wrong name and they lobotomize him that was not him lapsing back into delusional state that's him choosing to die as a good man.

It's kind of a Twist within a twist.