Hi, Averyl. Welcome aboard!
I am in Northern California and I bought all three of my buses in Oregon. Two of them successfully.
This is perfectly doable, but far from a casual project.
Insurance may be the worst stumbling-block. Not meaning to sound flippant, but I strongly recommend starting with an excellent 30-years-plus claim-free relationship with your insurance agent, and a spotless driving record.
There are rather many abandoned bus projects sitting around, and I believe there are reasons for this.
[If I sound old and school-teachery... I
am old and schoolteacherly!
]
To re-title the bus as a motor home, the DMV will need to inspect the more-or-less-completed conversion, including exterior repaint (no School Bus Yellow).
They can give you a temporary driving permit for a few months while you perform the conversion.
If you need more time, which most folks do, you may be able to put it on non-operational status and resume the registration process later, but I have not done this.
Different DMV offices differ in their "attitude" and knowledge, and I wound up "never setting foot again" in one, and receiving downright helpful service in another.
The days of throwing a futon in a bus and calling it an RV are long over. Perhaps it still happens, but if it does... it must be considered an accident -- a DMV clerk having a truly awful (or fabulous) day.
You should be ready to install proper bunks, bathroom, kitchen, electrics and plumbing. They have a list of such items, and require something like two-out-of-three of those items completed.
Diesel engines are a non-issue, so long as the vehicle ends up titled as a private "MH" -- motor home. (The California Vehicle Code also uses the term "house car", which evidently means the same thing.)
Bringing the bus in from out of state makes no difference, since the DMV will simply verify the VIN (serial number) while they are inspecting the conversion anyway.
There. That should put this silly idea safely out of your mind for a little while.