it's my understanding that it wasn't actually recieved all that well upon release - at least not to the level it is today - and I think that's a big part why we never really got another game in the series like SH2.

Actually, SH1 far exceeded Konami's expectations. The game was never meant to be a big seller, but the surprise success of SH1 led to a bigger budget for SH2. SH2, in turn, sold enough copies to get a Greatest Hits PS2 release, and sold about 650k of combined units (US+Japan) in its first month, according to this article - https://www.gamespot.com/articles/silent-hill-2-enjoys-brisk-sales/1100-2821563/

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Konami, seeing a franchise growing, quickly churned out SH3. The series started to see a significant decline in sales for Origins and Homecoming. Konami also hired a US studio with little experience, so it's quite likely the main driving force for the series disappearing was simply Konami's gradual shift away from console gaming and towards mobile gaming and pachinko slot machines. Silent Hill also always sold better in the US compared to Japan, and some consider it likely this was a contributing factor to why Konami didn't take the series as seriously due to local sales.