He wants our daughter to experience the death and help with the cleaning/cooking.
She’s one and a half

She’s super smart but I feel like her being involved might scar her for life.
No, it will not scar her for life.
It will probably affect you more than her.
If your husband wants her to watch and be involved, I would let them do that.
In general, adults and big kids seem to get more upset than little kids. For an adult or a big kid, they think they know how the world works, and butchering their pet feels unfair, like a betrayal of how things are supposed to be. Little kids are still learning about the world, so instead of feeling betrayed, they are more likely to accept that the world just does work this way. Yup, we eat chickens, and this is how the chicken goes from alive to dead to ready to cook to actually cooked and tasting good.
If your husband is matter-of-fact and doesn't get all emotional about it, your daughter will probably react similarly.
The worst part is he’s her buddy and he’s the biggest and most handsome we have. Not to mention his protection for the girls saved their lives during an attack.
Those are good reasons for YOU to feel upset, but your daughter might not feel that way. I'm sure she won't care that he's the biggest, most handsome, and protected the hens. She certainly might care that he's her buddy, but that would have to change anyway since he cannot be trusted to behave safely.