I've seen a playthrough of Silent Hill 1, watched the cutscenes from Silent Hill 2 and 3, and played Origins and Shattered Memories, so I know a bit about Silent Hill. All things considered, this movie doesn't look good at all. The first film had a poor script and mediocre acting, plus the plot changes opened up a bunch of holes. I'm fine with the movie not being canon, but unless they can explain the inconsistencies that the film translation opened, changing the plot only worsens things.
The one thing I did like about the Silent Hill movie is that it was more about the story than the 'scare' factor, which I think is really important. Hopefully that will carry over to the sequel.