It is only okay, IMO. It isn't great, but it isn't Homecoming. It is probably the best Silent Hill game not made by Team Silent.
As you suggest, the game has some lore that either doesn't make sense or directly contradicts previously established lore. This is why I think Silent Hill 2 was so successful at being peak Silent Hill: it doesn't constrain itself to a person or time where there are strict lore rules. This is also why I consider Silent Hill 3's narrative significantly weaker than Silent Hill 1 and only slightly better than Silent Hill 4. (I think SH3 was too many steps backwards and one step forwards, personally).
My ranking of Silent Hill is:
SH2, SH1, SH3, SH4, Origins, everything else.
I believe Konami considers it canon. Then again, they also acknowledge Homecoming exists as anything more than a soundtrack.
Personally I am not one of the people that hates on games like Book of Memories (never played it, not buying a Vita for it) or The Arcade (I actually liked The Arcade). They're spin-off titles that aren't mainline games and are meant to fill a role that is basically just using Silent Hill for window dressing. Also the movies. But I also didn't really like Shattered Memories. It had some interesting ideas and puzzles, but ultimately it failed as a reboot of Silent Hill IMO because it removed half of the game for chase sequences instead.