It's been established that the only reason healing doesn't work for some people is their amount of acceptance of whatever injury. I would think that if this could work, then the person capable of that acceptance/self visualization would also be able to heal back to a full biological state?
Either way, your question brings up an interesting point as to the limit(s) of "healing." King Ral-Na always knew himself to be a man, and his body's primary and secondary sex characteristics changes immediately upon his becoming a radiant, which makes sense, but that was a fairly significant physical change, demonstrating that large biological change is possible through healing.
So, what are the limits of change based on self perseption? Are their any? And given enough time and practice, could someone use such an ability to become a functional shapeshifter or sorts? I would assume Hoid can already do this if he really wanted to, but he's his own deal.