I don't know how SK has gotten so wayward. In fact, when you compare TH to ED, it seems like there are two different developers.
ED was a milestone in my opinion. It was the first game that mind-****ed me. After a while, I was like "ok, it's just another sanity-effect", yet I was still fooled when "flys" appeared on the screen (I actually got up and tried to swap them, only to realize the damn game tricked me).
Also, the "disk-read error" scared the hell out of me! I hadn't saved for a while and it would of completely ****ed me had it been true, but of course, it was the game just messsing with my head.
Now, I wish Nintendo (owning the rights to sanity-effects) would make something akin to ED, but in a faster-paced game. A game like RE and ED combined; where I am constantly in fear of some horrible monster eating me, and I don't know whether to trust what I see or not. Something like that has so much potential and has the ability to scare the living sh!t out of you.