Really people questioning his heart? And how would you know... he hasn't even been on the pitch.
Its pretty simple - he's just not as fit as the first 11, he doesn't have the same endurance or the same pace/acceleration and his recovery is slow. I don't see why people have to tear him down. Its not like he's suddenly going to run faster because Benitez tells him to, even if he gives 100% it might not be enough.
He could probably play league cup games, but playing him might also give him false hope that he might be involved. It's as simple as James not fitting Rafael's gameplan. It's unfortunate for James because he deserves to get gametime for a club, any club and now he's sitting around doing nothing. I think they probably should just loan him out and pay his full wages just so he can play.