This. You're describing exactly how a narcissist treats their children, and he will ruin your children's mental health. Both of them in different ways.
It doesn't really matter why your husband is the way he is, finding out why he's like that doesn't excuse his current behaviour and it won't make it stop. He's choosing to do that, as an adult. Don't pity the child he was, recognise that adults have a choice in how they behave.
You have a choice too, and if you walk away you will show your children you don't accept that behaviour and they shouldn't either.
I saw this with much kindness, because I know just how hard it is, but don't waste any more of your children's childhoods with him.
There's a better life out there for you all. You could have dinner alone together every evening. You could make all the rules and have a household of your own, make your children feel home is somewhere they can feel happy, relaxed and safe. Even if they still need to see him, they'll have you to come home to, a you who isn't trapped and repressed, trying to sooth a tyrant whilst trying to protect your children. That doesn't leave any space for them to know the real you.
You can't be a great parent with someone like that in your life. If he's not there, you can be a great parent and you children at least stand a chance of seeing how you should treat people and that they deserve to be loved as they are.
Incidentally, I have 3 extended family members who went to boarding school, they have their quirks, and one of them is still upset age 67 at being sent away so young (5!), but they're still kind hearted people. I went to BS when I was a teen (loved it). None of us are like your husband.
Your problem is not BS, its that you're married to someone your describing to have all the traits of narcissistic personality disorder.
If you'd hate the idea of your daughter growing up to marry someone like that, then don't accept it for yourself. Show yourself the same love you have for her.