If we're talking about psychological stress of the murderers, sure I agree. It's much less traumatic shooting someone than cutting them up with a chainsaw. And it's even less traumatic to a murderer to watch someone killed by poison or neural toxins, than by shooting them.
Yes, we're basically talking about inflicting "psychological stress" (aka pain / torture).
Surely the outrage over Manhunt would be a matter of killing, rather than the graphical nature of it?
The graphics, the physics, the interactivity, etc. etc. all combine to produce realism, obviously. Manhunt 2 is considered extremely distasteful because you interactively commit brutal torturous murders with a high level of realism. Again, I would ask why you would derive pleasure from this. Sure, you're not actually causing real agony, but neither would watching an animal be tortured cause real agony.
For example, how would you feel about an animal torture simulation, complete with screams of terror and agony, and highly realistic blood? Do I need to explain why this is extremely distasteful?