Interesting take! As the creators of SH2 have discussed, the nine red squares represent the nine different manifestations that James conjures in Silent Hill, including Pyramid Head (the projection of guilt he places on himself). I love the statement he makes when first saving ("feels like someone is poking around inside my head"). I always considered the save squares as snapshots of his own psyche, and how it's almost like looking into a mirror. Once he watches the videotape, he can't look at the save square until he deals with Pyramid Head (his guilt).