Papercrete inside a bus could work very well. Here are a few suggestions to use or ignore as you deem appropriate.
I would recommend using a very low cement mix with Borax included. I don't see any benefit of including sand in this particular application. You really don't need the papercrete to have high compressive strength. You are only looking for it to be an insulating material. The bus itself will provide all the mechanical strength needed. Experiment with various mixes to find one that you can use that will be fire resistant and mold resistant.
Spaceman's low cement mix should work extremely well. It's at least a good place to start.
I would suggest trying to cast papercrete as blocks or small panels on the ground. If such a low cement mix without sand is used, you should have a very easy time cutting the cured/dried papercrete with a saw. Even a hand saw should go through it like a hot knife through butter. The lack of sand will prevent it from damaging cutting tools. You should be able to take those flat blocks and panels and cut them to shape to fit all the strange nooks and crannies in the bus. You probably can even sculpt them with rasp or an angle grinder. I would then suggest glueing the smaller chunks of paperctete together to form custom conformed shaped panels, almost like standard automotive door and ceiling panels. You might even consider gluing fabric on the interior surface of the papercrete as a finished surface. That would make it easy to have seams that show, but are still attractive. Think of it almost like an upholstery project. You're just using papercrete instead of flamable urethane foam rubber.
These custom fitted panels could then be easily glued in place anywhere inside the bus. This system should be able to easily flex and absorb any flexing that the bus gives it. If you are careful, you should be able to use small dots of glue to stick the papercrete to the metal interior of the bus. That will allow you to rip a papercrete panel off the wall to make repairs at a later time. It will also allow you to remove a panel that might get wet so that it can dry out in the open.
IMPORTANT:
The FIRST step in this process is to SEAL UP THE SHELL OF THE BUS. You will be counting on the bus to keep the papercrete dry. Repair any rusted spots, and seal all the metal seams extremely well. It will be far easier to do this sealing step long before papercrete is installed inside the bus. You'll be able to hose down the bus and watch for leaks without worrying about getting any papercrete wet.
I hope these ideas are helpful.
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