Clawdy,
"I believed James's version of events about his sister's death."
Not sure I can, because:
(a) I find it extremely unlikely that James would choose to relay such a traumatic childhood event to Mac, of all people. Someone who's seemingly the only other person Paula has feelings for, and someone he almost succeeded in killing.
At a real stretch, I suppose it could be argued that James was prepared to risk making his (unwitnessed by lawyer, off the record) statement in the hope that Mac would honour his (bonkers) promise to reunite Crystal and their kids elsewhere (and Morgan set up safely with hers).
However, I somehow don't think the welfare of his children is high priority, given he's subjected them to witnessing DV/ DA of their mothers.
and (b) Morgan....bit of an open book; doesn't seem capable of lying, even to save herself from Crystal's brutality once police had started asking awkward questions...stated, re Mary's disappearance, that James had "never meant it to happen", and that he wasn't really a bad person, for having done it.
Why would simply holding and comforting his little sister, whilst she died (his version of what happened after their father locked them under the stairs for a week) provoke that feeling?
Can easily believe an overburdened, caring, 9 yr old lad (essentially parent figure) could feel he'd failed her, or desperate guilt that couldn't prevent it (abusive, drunk father/ mother in hospital)...but doesn't quite chime with his wording.
UNLESS...(my latest theory!)...he felt overwhelmingly responsible for Mary's death because he'd caused the "mucking around", which angered his Father enough to lock them up in the first place.
What might that have been?
Something similar to Paula/ Callum's experimenting?
Or maybe James ended up having to 'mercy kill' his dying sister, to spare her suffering (another parallel with Paula/ Callum, if that's indeed what the hospital smothering was about?), and remorseful drunk, abusive Father discovered what looked like murder when he finally returned?
Oh, Conor McPherson, throw us a few clues...
(And you ruined my chances of sleeping soundly for the next week, damn you 
).