Well, by mental state, you have three different main categories.
1) Could he pass a mini-mental exam? Sure. In fact when he's evaluated later by a psychiatrist, he passes.
2) Does he possess certain qualities which challenge him, affect his decisions, and impair him to live life fully? Yes.
But so do most people to some degree. Probably 10% of folks are mentally impaired by some aspect of their medical condition. Most get by fine without medication though they could benefit from it.
You wouldn't believe how high the percentage of folks displaying sociopathic behaviour is truly. This probably plays a factor because many educators, physicians, lawyers, politicians could be diagnosed as sociopaths(now called Antisocial Personality Disorder). Walt here is clearly one.
http://www.cix.co.uk/~klockstone/spath.htm
Probably 1 in 25 is a sociopath. This is for a reference not an endorsement.
3) Has the cancer gone to his brain at any point in the show? Probably not.
He's been going to the oncologist. He's been having scans to help locate the tumors (which have been isolated to his lung). He's been having radiation and chemotherapy.
It's hardly one of the most popular episodes, but Jessie directly muses over a tumor going to his brain and affecting his judgement. Particularly because it becomes obsessive and he becomes affected by megalomania.