Stories still must operate by internal logic.
Do you have any idea how often I've fantasized about inscribing this sentence on a baseball bat and striking people here over the head with it?
Anytime anybody starts with "Anything can happen in Silent Hill so my theory can't be wrong", it's an automatic declaration of "I'm wasting everybody's time with my bullshit and could have summed up everything I said by not posting anything at all".
A good story, as Kenji said, cannot exist without internal consistency. That being said, the average writer, if he/she isn't completely inept, is going to leave it to assumption that real world rules apply to the story unless specifically stated/displayed, or strongly implied otherwise. Every fictional universe has its own set of rules, but in almost all of them, what makes them special is, specifically, the exceptions to rules of reality as we know them.
Harry Potter details a great many exceptions, but outside of those exceptions, the reader is going to assume that normal rules apply until given a good reason to believe otherwise. Early on in the series, when it was incomplete, a lot of fans assumed that Harry and Hermione would end up as a couple. When incomplete, some assumptions featuring other characters were every bit as valid. The seventh book has resolved this issue for good. Now, all but one of those theories are worthless. Of course, before we reached that point, almost all
potential theories on this score were absolutely meaningless because they conflicted with the internal rules of the series. Five years ago, I could not prove that Harry Potter would
never marry a New York business executive who was also a transsexual serial killer alien from Ganymede in disguise--Rowling
could have written it that way if she really wanted to--but, such a pairing would make no sense within the context of the story as it had been told all along, even if some of those constituent elements did exist within the
Harry Potter universe.
Likewise,
Silent Hill plays by its own set of rules. Initially, Patman's theory fit within them as they were established. But, the third game came along and established a great many new rules, resolved several issues which were previously ambiguous. Whereas all four endings could be said to have validity, we now know that the story continues on after those events, and only one ending ties those two stories together. To reduce ambiguity, the developers have stated outright which ending that is.
The point is that when the first game stood alone, its internal rules allowed for the possibility that Harry was trapped, forever, in a time loop, but
Silent Hill 3 established new rules that rendered this theory impossible. And, one cannot pay close attention to games in this series without understanding that these guys do take internal consistency seriously. There are quite a lot of instances where ambiguities end up resolved by future games, but very few instances where future games conflict with previous ones in terms of story.
You can easily apply Occam's Razor to the topic at hand by making a simple comparison: In both
Silent Hill and
Silent Hill 3, Harry and Heather both acquire Aglaophotis. Both are faced with a situation in which using it properly will have a profound effect on future events. It is perfectly acceptable for Heather to use it properly, so why is it not the same for Harry? The simple answer is because while both of them are able to discover what it is and how it is useful, Heather does this before it is necessary for her to use it. Harry does not find out until it is too late.
If you have to circumvent this with time loops, you have to account for the fact that the loop must break at some point. If Harry breaks the loop by achieving the Good+ ending, you are required to explain several things:
- Why does the time loop end with this ending in particular? If there is a loop, and this is the only outcome which breaks it, why is this the case? It must be important for some reason.
- Inherent in the idea of a time loop is the assumption that Harry eventually manages to use the red liquid on Cybil and save her from the parasite. This means that, for some reason, Harry is carrying knowledge back through time with him.
There are only two ways in which Harry can affect a real change in the course of events. The rest plays out the same way no matter what he does or does not do. Besides Cybil, the other is saving Kaufman and going on that sidequest. This sidequest is vital to getting the good endings, yet it relies on one of two assumptions: either Harry decided to explore the resort area and came across Annie's Bar at the right time, or he just happened to hear the commotion inside while passing. Both are equally valid assumptions, so it's possible that his saving Kaufman was just a fortunate accident.
To save Cybil, Harry has to collect the red liquid. This is explained easily enough, because his attention is drawn to it by the noise of it shattering and the reasonable assumption he makes about it being important, since it was broken deliberately. He also must use it on her when she is parasitized. He must have some reason to believe it will work. This is not something you can say is a reasonable assumption, so if there's a time loop, you have assume that Harry remembers from a previous experience that the red liquid is more than just dope, and that it can potentially save Cybil because her condition makes him remember something that happened in a past trip through the loop.
This leads to the question of why this particular piece of information is important enough to violate the otherwise completely closed time loop when nothing else is, and it's an important question because there are quite a few things which would be vastly more valuable for Harry to know ahead of time (Dahlia's deception and manipulation, for example), or that there really isn't any chance he really can save Cheryl. Either would have a profound effect on how things turned out. Both are more personally important to Harry than the life of one cop he's known for three hours. It could be that he feels anguish over killing Cybil, but how does that even compare to the anguish of knowing you can't save your own child?
tl;dr: The time loop theory doesn't work anymore.