While I can’t access the full-text, “A narrative analysis of bipolar psychosis: An empirical relationship between neurochemistry and the collective unconscious” looks interesting and provides the following quote to think about:
“…it will assuredly be a long time before the physiology and pathology of the brain and the psychology of the unconscious are able to join hands. Till then they must go their separate ways. But psychiatry, whose concern is the total man, is forced by its task of understanding and treating the sick to consider both sides, regardless of the gulf that yawns between the two aspects of the psychic phenomenon. Even if it is not yet granted to our present insight to discover the bridges that connect the visible and tangible nature of the brain with the apparent insubstantiality of psychic forms, the unerring certainty of their presence nevertheless remains. May this certainty safeguard investigators from the impatient error of neglecting one side in favour of the other, and, still worse, of wishing to replace one by the other. For indeed, nature would not exist without substance, but neither would she exist for us if she were not reflected in psyche.” – Jung
My experiences with psychosis have been varied – while I can relate to some of my initial first-episode psychosis fitting with that as described in ‘Boredom, dopamine, and the thrill of psychosis: psychiatry in a new key‘, eventually that was replaced by pure terror with visual, olfactory and auditory hallucinations that still haunt me. Things have improved but the persistent auditory hallucinations are undeniably unpleasant.
Muscarinic models of psychosis are intriguing and add another dimension to the DA/NMDAR-based models. For example, mAChR antagonism by scopolamine is ‘psychotomimetic’ – in shamanic culture, surviving the experience is seen as providing ‘courage’ or ‘power’:
“The intoxication induced by scopolamine and the other tropane alkaloids can last as long as four days, with often terrifying paranoid visions, followed by a calmer state, and then retrograde amnesia, total or partial. Scopolamine overdose is recognized as a cause of acute paranoid hallucinatory psychoses, of a state of delirium like that associated with a very high fever, and of acute toxic psychosis, including confusion, agitation, rambling speech, hallucinations, paranoid behaviors, and delusions. The hallucinations induced by scopolamine are, as a general rule, terrifying.” [link]
mAChRs in schizophrenia:
“A neuroimaging study has shown that subjects with schizophrenia exhibit abnormalities of brain mAChRs. Single-photon emission computed tomography using a nonselective muscarinic ligand [123I]-iodoquinuclidinyl benzilate ([123I]-IQNB) revealed lower mAChRs availability in the cortex and basal ganglia of unmediated subjects with schizophrenia than in those of healthy subjects. More importantly, the severity of positive symptoms in these patients negatively correlated with mAChRs availability. Information on schizophrenia-associated alterations in each mAChR subtype comes from postmortem studies. Binding levels of [3H]-pirenzepine, a M1 and M4 mAChRs-preferring ligand, are reduced in the prefrontal cortex and hippocampus of patients with schizophrenia. Expression levels of mRNA for M1 and M4 mAChRs are also decreased in the prefrontal cortex and hippocampus ofthese patients, respectively. However, no alterations in mRNA expression levels for M2 and M3 mAChRs are detected in the prefrontal cortex of patients with schizophrenia. Interestingly, a recent study has shown that the schizophrenia cohort can be divided into two distinct populations based on cortical [3H]-pirenzepine binding density. The first subpopulation of patients with schizophrenia (26% of all subjects) show marked reduction of cortical [3H]-pirenzepine binging and were accordingly termed by Scarr and colleagues “muscarinic receptor-deficit schizophrenia.” On the other hand, there is no difference in [3H]-pirenzepine binding between the second subgroup of patients and control subjects.” Since mAChRs-deficit in this subgroup was found in postmortem studies, it remains to be investigated how mAChRs-deficiency, particularly dysfunction of M1 and M4 subtypes, contributes to schizophrenia psychotic and cognitive symptoms, and what would be the outcome of appropriate treatment.”
mAChRs as therapeutic targets:
“Many important physiological actions of ACh are mediated by mAChRs. The mAChRs are members of the rhodopsin-like G-protein-coupled receptors (GPCRs) and have five mAChR subtypes (M1–M5). The M1, M3, and M5 mAChRs couple to Gq/11 proteins, whereas the M2 and M4 mAChRs couple to Gi/o proteins. Each mAChRs subtype shows a different pattern of distribution. The M1, M4, and M5 mAChRs are predominantly distributed in the central nervous system (CNS), whereas the M2 and M3 mAChRs are distributed in both the CNS and peripheral systems”
It is believed that activation of M1 mAChR in the forebrain potentiates NMDA receptor currents, which might play important role in the treatment of schizophrenia. The M1 mAChR is co-localized with the NR1 subunit of NMDA receptors in CA1 pyramidal cells in the hippocampus and other cortical regions. M1 and M4 mAChRs are heavily expressed in the striatum and their activation serves a long-term modulatory role, either increasing or decreasing cell excitability [review] Muscarinic regulation of dopamine and glutamate transmission in the nucleus accumbens is reviewed here.
Intriguingly, M1-type muscarinic receptor transduction facilitates encoding of unconscious, prepotent behavioral repertoires at the core of affective disorders  Potentially playing a role in clozapine’s ‘superior’ efficacy, the active metabolite N-desmethylclozapine is thought to enhance working memory and improve other symptoms via its M1 receptor agonist activity  although this has been disputed: “in [the] human cortex NDMC acts as a M1 receptor antagonist and was documented as failing to cause any significant improvements in patient symptom severity in a double-blind, placebo-controlled phase IIB clinical trial” [3, discussed here]. The use of muscarinic M1/M2/M4-preferring receptor agonists as novel pharmacological tools in the treatment of schizophrenia has been investigated  The M1 mAChR has been proposed as a therapeutic target for the development of novel and selective rapid-acting antidepressants based on the action of scopolamine, a mAChR antagonist .
Nicotinic and muscarinic agonists, along with acetylcholinesterase inhibitors have been found to stimulate a common pathway to enhance GluN2B-NMDAR responses: activation of M1 receptors, directly or indirectly, causes the selective enhancement of NR2B-NMDAR responses in CA1 pyramidal cells  The effect of nicotine has been proposed to be secondary to increased release of ACh via the activation of nAChRs, likewise involving M1 receptor activation through ACh.
Fear conditioning is accompanied by dynamic plasticity of mAChRs.The nonselective muscarinic antagonist scopolamine is known to impair the acquisition of some learning tasks such as inhibitory avoidance while a selective M1 muscarinic antagonist differentially affects aversively motivated tasks known to be dependent on hippocampal integrity (such as contextual fear conditioning and inhibitory avoidance) whilst not affecting similar hippocampus-independent tasks . Muscarinic agonists strongly enhance contextual memory in a fear conditioning paradigm and inhibitory avoidance by modulating amygdala function. An implicit system of fear conditioning, facilitated by M1 muscarinic receptor, acts in addition to the amygdala-dependent declarative enhancement of emotional memory. 
A recent article highlights the therapeutic potential of M1 mAChR PAMs:
Potentiation of M1 Muscarinic Receptor Reverses Plasticity Deficits and Negative and Cognitive Symptoms in a Schizophrenia Mouse Model.
Schizophrenia patients exhibit deficits in signaling of the M1 subtype of muscarinic acetylcholine receptor (mAChR) in the prefrontal cortex (PFC) and also display impaired cortical long term depression (LTD). We report that selective activation of the M1 mAChR subtype induces LTD in PFC and that this response is completely lost after repeated administration of phencyclidine (PCP), a mouse model of schizophrenia. Further, discovery of a novel, systemically active M1 positive allosteric modulator (PAM), VU0453595, allowed us to evaluate the impact of selective potentiation of M1 on induction of LTD and behavioral deficits in PCP-treated mice. Interestingly, VU0453595 fully restored impaired LTD as well as deficits in cognitive function and social interaction in these mice. These results provide critical new insights into synaptic changes that may contribute to behavioral deficits in this mouse model and support a role for selective M1 PAMs as a novel approach for the treatment of schizophrenia
Peripherally, M1/M5 mAChR signaling up-regulates IgG1 and pro-inflammatory cytokine production 
Small Molecule Therapeutics for Schizophrenia (2015) covers mAChRs in more detail:
“One of the most important findings with xanomeline is that it improved positive, negative, and cognitive symptoms in patients with schizophrenia. This provides the proof of concept that activation of M1/M4 mAChR could be beneficial in the treatment of schizophrenia. Interestingly, patients who took part in the study of xanomeline for schizophrenia were mainly those who had exhibited either poor response or worsening symptoms under treatment with D2 receptor antagonists. Therefore, activation of M1 and M4 mAChRs might be an attractive approach for patients resistant to current D2 receptor antagonists. However, it should be noted that the study of xanomeline for schizophrenia was a pilot clinical study with only 20 patients. Therefore, the efficacy of xanomeline or other M1/M4 mAChR agonists for schizophrenia remains to be investigated in large-scale clinical studies.”
“Although xanomeline acts not only on mAChRs but also on other off-targets, including the serotonergic receptors, the findings that several different mAChR agonists also show antipsychotic-like efficacy indicate that xanomeline’s antipsychotic-like effects arise from activation of mAChRs. Furthermore, several studies in M1 or M4 mAChR knockout mice provide clear evidence of the roles of individual mAChR subtypes in the antipsychotic-like efficacy of xanomeline. Woolley and colleagues have shown that the effects of xanomeline on amphetamine-induced locomotor hyperactivity are abolished in M4 mAChR knockout mice, but are only marginally attenuated in M1 mAChR knockout mice. Dencker and colleagues have also found that xanomeline exerts no antipsychotic-like effects in mice lacking the M4 mAChR in D1 dopamine receptor-expressing cells. Taken together, these findings indicate that antipsychotic-like efficacy of xanomeline might be predominantly mediated via the M4 mAChR. This assumption may be supported by a recent paper showing that the potency of [5R-(exo)]-6-[4-butylthio-1,2,5-thiadiazol-3-yl]-1-azabicyclo-[3.2.1]-octane (BuTAC), another mAChR agonist, in the conditioned avoidance test is right-shifted in M4 mAChR knockout mice.”
M4 PAMs may provide a strategy for addressing the more complex affective and cognitive disruptions associated with schizophrenia . Selective M4 PAMs may represent a novel mechanism for treating multiple symptoms of schizophrenia, including disruptions in sleep architecture without a sedative profile .
Oddly enough, a recent article covers what I was trying to cover…
The muscarinic system, cognition and schizophrenia concludes:
“Although limited in popularity compared to dopamine and NMDA models of schizophrenia, the ballooning use of anti-muscarinic animal models not only highlights the involvement of the muscarinic system in the symptomology of schizophrenia, but also provides an alternate means to develop and verify the therapeutic efficacy of novel treatments aimed at treating antipsychotic drug resistant symptoms. Whilst the development of compounds that specifically target the M1 and M4 receptors is in its infancy, the limited research available provides promising insight into their therapeutic capacity. However, it should be apparent from this review that additional research is required, as without more in-depth modelling and compound optimization, human clinical trials will not be possible and these potentially useful muscarinic compounds may suffer the same fate as xanomeline. On that note, it is recommended that investigations into the therapeutic efficiency of xanomeline should recommence. Despite the potential gastrointestinal side-effects, xanomeline has been documented to express both antipsychotic and nootropic qualities in animal models and human clinical trials. With increasing effort being directed towards developing new drugs to treat the cognitive symptoms of schizophrenia, it would be reasonable to suggest recommencing research on a drug that has already shown therapeutic efficacy.”