Download the program from http://games.groups.yahoo.com/group/silenthillmodifications/ or from here:
Put it in the same directory as your games, usually the path shown in the image below. Open it and then you can browse the files and extract any files you want to edit as tga files. Open these in photoshop. When you are done editing, use the “replace current file” feature to put them back into the game.
SH3: Most textures cannot be viewed or edited except for Heather’s textures, the enemies, and a few other things. Most locations can’t even be viewed. To view them, use the Level Editor instead.