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An Atari spokesman Atari handles distribution of Konami games in Australia told Gamespot that the OFLC "found issue with the high impact of Silent Hill's violence," though unlike Fallout 3, where use of Morphine was cited as a reason for that game's ban, no specifics instances are named.
James is in the world of Silent Hill during the events of Silent Hill 2 because he killed his wife, and (depending on what ending Silent Hill 2 players receive) he's likely never going to leave - nor does he deserve to.