The other one being that a second pyramid head is formed from James's guilt for killing Eddie.
The second Pyramid Head existed long before James killed Eddie, the stone tablet in the gallows in Toluca Prision is evident of that.
With Angela things are different. Right off the bat when you head towards town you meet Angela and James asks her if town is ahead. Then it proceeds with this conversation.
Angela: I think youâ€™d better stay away. This uh... this town... thereâ€™s
something... â€œwrongâ€ with it. Itâ€™s kind of hard to explain, but...
James: Is it dangerous?
Angela: Maybe... And itâ€™s not just the fog either...Itâ€™s....
James: Okay I got it. Iâ€™ll be careful.
Angela: Iâ€™m not lying.
James: No, I believe you. Itâ€™s just...I guess I really donâ€™t care if itâ€™s
dangerous or not. Iâ€™m going to town either way.
Here's what bugs me about this conversation. If Angela just arrived at Silent Hill looking for her mother than how could she possibly know there's something wrong with the town?
Like Aura said, she was already in her own abyss, this could mean she walked into town, saw some whack shit and just got outside of town as quickly as possible. She didn't say "HOLY FUCK STAY THE HELL AWAY FROM THERE MAN, THERE'S SOME WHACK SHIT GOIN' ON IN THAT CRIB!" which would indicate she wasn't in town all that long. She could have gone into town briefly, saw what was happening, and tried to seek shelter in like... a graveyard or something. She could also have been talking about the fact that it [seemed] abandoned, or the age old "being watched" feeling.
On top of this James is the only one that ever sees her, Laura, Eddie, and Maria never meet her. There's also the third time you meet her.
Maria is a manifestation, the whole reason she avoids going in the bowling alley is because if Laura and Eddie saw James talking to thin air James probably would have realized something was up (as if all the monsters and shit didn't already set off a few alarms)-she would cease to exist and the course of James' journey would be skewed to unimaginable degrees.
It was more of a self preservation tactic that the town was using to lead James to his destination. Any earlier and this probably would have been compromised. James was lead to each location for a purpose, and the realization that Maria wasn't real would set him way off course and pretty much defeat the entire purpose of the story.
The same principle applies with Angela, if Angela were to see James talking to thin air...yada yada...
After you've made you way through the labyrinth you enter a room and find Angela and a monster that is thought to resemble her father molesting her. But why is James seeing Angela's monster?
It would seem that Eddie has his own monster/s and thinks that they are making fun of him. James never sees these monsters, all he sees are figures of unidentifiable bodies. So why would James suddenly be able to see Angela's monster?
Angela is just seeing her dad, not to be rude here but surely you don't think Angela confused this grotesque creature for her own dad did you? James just sees it as this monster.
Now for the final conversation between Angela and James.
Angela: Mama! Mama, I was looking for you.
Angela: Now youâ€™re the only one left. Maybe then.... Maybe then I can rest.
Angela: Mama, why are you running away?
Angela: Youâ€™re not Mama. Itâ€™s you... I, Iâ€™m sorry...
James: Angela, no....
Angela: Thank you for saving me... But I wish you hadnâ€™t. Even Mama said it... I deserved what happened...
James: No Angela, thatâ€™s wrong!
Angela: No. Donâ€™t pity me. Iâ€™m not worth it....
Angela: Or maybe you think you can save me? Will you love me? Take care of me? Heal all my pain?
Angela: Thatâ€™s what I thought. James. Give me back that knife.
James: No... I, I wonâ€™t.
Angela: Saving it for yourself?
James: Me? No... Iâ€™d never kill myself....
Itâ€™s hot as hell in here.
Angela: You see it too? For me, itâ€™s always like this.
Angela confusing James for her mother is most likely just the town playing with Angela's head, and she quickly realizes what's happening.
The lines in bold I will talk about in my theory. I believe that Angela was created from James's mind as a symbol of self punishment or wanting to be judged. James is probably in a toss of emotions wondering if his killing of Mary is justifiable. Since the letter from Mary was revealed as fake I believe James came to silent hill for the subconscious need to be judged for what he did.
The last sentence is sort of inaccurate since James didn't know about the goings on in the town until he's plunged right into the heart of it. The town called him, and his journey was just the towns douchey way of jogging his memory.
James expresses that he already knows that danger lies ahead in the town
That may be, but not to the exact degree, I doubt he could even begin to fathom what he was in for.
Your theory is incorrect, and the whole Angela/Eddie/Laura isn't real debate has been debunked numerous times over. Remember, Silent Hill was sort of a big fucking place, so it's easy for the supporting cast not to run into any other supporting characters, having Angela more isolated was just a plot device to emphasize just how far gone she was to begin with. You don't find out that Eddie is batshit crazy until around the end of the game, but you're given nods that Angela is a little kooky right from the get go.