Trivia: After the film was released, director M.J. Bassett (then credited as "Michael J. Bassett") admitted she was extremely disappointed by how the film turned out, and even wrote a blog entry where she apologized to fans who were also disappointed by it. In a later interview, Bassett admitted to second-guessing many of the creative choices in the film, often altering her vision to try and make the movie more broad and appealing for the producers, instead of fighting to make a more personal film with a clear vision. Bassett called the film a "nightmare dance" that she just "couldn't do."
Trivia: An interesting detail many don't pick up on - in the original film, it is subtly established that Christabella is Dhalia's sister through a line of dialog. And Dhalia is of course Alessa's mother. This film makes a brief reference to Claudia being Christabella's (and thus Dhalia's) sister as well, and the film firmly establishes that Claudia is Vincent's mother. Thus, technically Heather (who is half of the fractured-soul of Alessa) and Vincent are having an incestuous relationship, because they are technically cousins and it is implied they are in love at the end of the film. (Of course they don't know this, but it's still there).
Trivia: Roger Avery, who wrote the original film, originally planned on writing this sequel. However, he was jailed for vehicular manslaughter following a car-accident shortly before he began work on the script. He managed to work out a deal that would allow him to write the film from prison, but his negotiations with the studio eventually fell through, and he was forced to leave the project.
Trivia: Sean Bean, who appears as Harry/Christopher, is notorious for having "died" onscreen in many of his roles. (He is currently one of the top 5 actors who have had the most on-screen deaths) While his character does indeed survive the film, he is briefly seen dying in a dream-sequence, making this film technically count as a film in which he both dies onscreen, but also a film he survives.
Trivia: Besides the SH3 references the movie is based on there are more Silent Hill game hints. When the lead female is going through the names she has already used, one is Mary. That is the name of the woman you're looking for in SH2. At the end the truck driver Travis Grady is a character you play as in SH: Origins, and the prison bus that goes into the town and fades is a reference to "Silent Hill: Downpour" which begins with a prison bus containing the lead character crashing on the outskirts of town.
Answer: I believe your theory is correct, it appears to go out of focus to help cover up some unconvincing CGI. The final explosion looks very cartoonish.
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