Yeah, everyone in the town that was part of that cult was dead. They just wouldn't lay down
Ah yes, Pyramid Head! He's the stalker of James Sunderland from Silent Hill 2. He pretty much follows you around the game stopping you up whenever he gets the chance, simmliar to what he was doing in the movie. They didn't explain his presence in the movie much because basically I think they just put him there to shut the fans up. But in the game it goes like this...
Back during the Civil War, Silent Hill had a prison camp for captured rebel soldiers (As SH was in the North). At the prison camp they would have executioners who would usually wear white smocks and triangular hoods to conceal their face. The prisoners would have a choice of how they would like to die, either...
1. By hanging
2. By skewering
Hanging is pretty much self explanitory, as for the skewring, they would take the prisoner, hang them upside down on a metal box frame, and spear them through the chest. Afterwards the executioner would clean off the instruments at Toluca Lake or "Blood Lake" as the water tended to get quite red. Pyramid Head represents part of the town's bloody history as the spirit's of such men couldn't possibly be pardoned due to the excessive murders on his soul. So they're pretty much damned to roam in Silent Hill. PH's look is similar to the costume he used to wear as an executioner only instead of a triangular hood he has an extremely pointy head now. In the game Pyramid Head is a lot more of a badass than the regular demons because not only is he out to kill the damned who happen to flock to SH for whatever reason, but he also kills other demons (and is seen in a few scenes in the game which can only be described as rape of a demon). The first half of the game he can be seen carrying the Great Knife - which is the weapon he was using in the movie. The other half og the game he's using a spear - like the ones used to skewer the prisoners to death.
This is the picture you find in the game that kinda explains that he was to be the one to lead the damned once time came to take over. You can see the tortured souls of his skewer victims behind him.
Hope that clears that up for you Also, remeber. This has nothing to do with the movie his role in the movie is purely to wreak havoc.
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