To the argument that "it's just a hallucination," you can say:

What is the standard you would use for "normal" perception for comparison? Everyone's perception is slightly different, and is continually altered by each food we eat, everything we put into our bodies, the amount of sleep we've had, sex, illness, hormones, physical labor, all the peculiarities of each person's particular physiology... ETC. Remind your friend that your perception is defined by many factors, and you can't separate YOURSELF from those factors, because YOU YOURSELF are that body, you are what you eat, sleep, experience, etc. Think not only foods and the ever-changing chemical states of the brain, but also the emotional filter that we always put over our experience of the world, and it is that emotional layer of personal experience that psychedelics can truly help the most with... by teaching you that you can actually be happy to be alive at each MOMENT of your life, rather than thinking about particular jealous ego concerns.

You can just be absorbed in the life all around you, connected to the reality of other people without forgetting that they "are really in there" and that they matter, they are another pair of eyes for the life of the world to see itself through.

You should say things of this nature.

lol, I could go on and on, but ditto on the Doors of Perception. I also recommend the DVDs "Ram Dass: Fierce Grace" and "Timothy Leary's Dead," if you can find them... and above all the book "Be Here Now" by Ram Dass. I recommend these not just for your friend but for you too.