I think it is unusual. DH regularly plays rough/chasing/monster games with DC and they shriek and run around in apparent terror but giggling their heads off and come back asking for more - they have never ever called him scary and DS (5) only calls DH naughty if DH does something that DS doesn't like e.g. takes away a toy that DS was being inappropriate with, if DS is in a bad mood and DH brings the wrong colour plate or something, or if DH ever accidentally hurts them (which he would immediately apologise for and check they are OK) - I think all this is fairly appropriate meaning of the word "naughty" for a 5yo (the plate thing is a bit age delayed but that's DS, not universal).
Playing rough can be fun and appropriate and helpful but DH should be able to rein it in before DS is getting overly hyped up.
The overall attitude/layer of anger and general grumpiness and irritability does sound a bit scary/intimidating. Do you find you're walking on eggshells not to set him off, or think the DC might be?
In terms of protecting them (or not) from his anger if you were to split up, I think this is a bit of a fallacy in that we sort of kid ourselves oh we can step in and prevent anything really awful from happening, or he's got to have a bit of a filter on himself because I'm there. But in reality if a child is feeling unsafe then that is a bit like living with a smoker - it doesn't matter how much non-smoke you're breathing out near the smoker, they are still being exposed to the smoke. So there is a benefit IMO of them having the experience of at least one home which is safe, always, rather than having that underlying threat at home all the time.
I don't say this to mean you need to lawyer up/divorce immediately - but I do think it's important to note that safety is considered one of the three key things that children need from their parents for healthy attachment - experiencing threat from a parental figure has some quite serious potential consequences, although this is more associated with a parent who is violent or unpredictable or regularly flies into rages. I don't know whether this would meet that threshold, but the fact your DS calls him scary would worry me and it definitely warrants a discussion/wake up call for DH.
Do you think he is depressed/stressed/struggling with mental health in any way? Would he be open to looking at that? What if you approached it as a concern about him, for his wellbeing primarily rather than the affect on DS - even though this is also a concern, I feel like leading with DS would be more likely to provoke defensiveness whereas if you present as being concerned about DH primarily and then express worry about the effect on DS as more of a side point or supporting factor, then he might be more open to considering it.
The other thing is that children do learn a lot from what they see so I wonder if your DS saying he "hates" you/other children when he feels aggrieved by something is a sort of learned aggression response? I know that emotionally aggressive outbursts can be normal at 5 (god knows, we've been through this too) so could just be totally normal 5yo emotional immaturity, but it's just probably something to keep an eye on in the context of other things.