That's what I believe too, this is just a dream his mind has created to stop all the suffering after having killed the three women around him with his own powers when he was unable to control them (I mentioned it some time ago).The entire game and everyone in it is a hallucination in his mind.
So you can image who these three women of the island are (mom and 2 daughters), they're sort of shadows of the real dead women (you surely can identify who is who, there are more than obvious similarities with the real dead women).
Regards