As far as psychedelics in South America, I think it starts with Chavin (approx. 1000 BCE) in Peru. They used psychedelics in religious ceremonies - DMT in the form of yopo, and the San Pedro cactus, which contains mescaline - not as strong as peyote but still potent. When they moved into the jungle they discovered ayahuasca, which is a tea you make by boiling caapi vine and chacruna leaves for about 6-8 hours (at least). The MAOI in the caapi activates the DMT in the viridis leaves. Not sure about Castenada or Alex Grey - they are both American. iirc Don Juan was Mexican/didn't exist

i used to eat peyote with the locals in Portales, NM.
a few years ago my friend went on one of the shamanic tours they sell online. Can't remember which one exactly but here's an example:
http://www.ayahuasca-shamanism.co.uk/
He drank ayahuasca for two weeks with a native shaman and some tribal elders. I think this was in Brazil or Ecuador, not sure. The tribe elders told him they had contacted entities from elsewhere in the galaxy- they drove around in spacecraft and everything. the entities are invisible unless you are tripping on ayahuasca. The shamen claimed they received all kinds of occult knowledge from the entities (who can travel through time). Apparenlty the world ends in 2012, the aliens will reveal themselves to mankind again, we'll live in peace for 1000 years, yadda yadda.
Breaking Open the Head covers Daniel Pinchbeck's ayahuasca tour in South America. It's good but overhyped (Pinchbeck tries to sell himself too much imo):
http://www.breakingopenthehead.com/
i plan to visit Uruguay next summer. the same friend bought a small house there - i just need enough money for a plane ticket. ayahuasca and locally-grown cannabis are way cheap.