In my humble opinion as a fan of Naruto and Silent Hill, NO. He would be way too overpowered, as a antagonist Psychopath maybe, still it wouldn't make much sense. He would be an overpowered adversary in that situation. As a monster, he is human and would have no reason for chasing a weak non-powered protagonist. Despite that he is somewhat dark as a character, he doesn't really compare with Pyramid Head, and some of the other enemies in the Silent Hill series.
Granted he is totally insane. Unless he was entering the town for some Bizarre reason and had enemies that equally made him feel vulnerable as a game Protagonist, or you were playing as someone who was equally powerful ex: Much more enemies to express all of his sins, or all of his fSears, I don't think any Naruto character could fit perfectly into a cross-over.
The game would lack the horror it normally does because either way, I don't think most animes go well when combined in games like these. Unless I am missing something else, this just wouldn't work plot-wise. xD
That said, a gaia friend started a decent fanfic. It has mistakes in it regarding Pyramid Head and what not, but it is pretty cool so far.
Hidan wakes up in Silent Hill after being killed.
http://doombells.deviantart.com/favourites/?offset=24#/d3cdipzhttp://doombells.deviantart.com/favourites/?offset=24#/d3cdgzj 
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