When James comes to his sudden understanding of the meaning behind Pyramid Head's existence. After spending the entire game in denial and more or less running from himself, he finally mans up and faces the truth head on.
James:I was weak. That's why I needed you. Needed someone to punish me for my sins... But that's all over now... I know the truth... Now it's time to end this.
That part can also double as a moment of Fridge Brilliance if you consider that James is speaking not only about Pyramid Head, but also Maria. He's finally done with them reminding him of his sin.
Right when the video finishes (Room 312), and you're left watching James just sit there in a dead silent room, realizing what he's done. Also a Tear Jerker right when the music starts.
Arguably the entire game for the psychological survival horror genre.