I've co-run a long-time rescue for 10 years now, we fluctuate between 16-20 horses at any one time. The biggest thing we've ever learned is "good fences make good neighbors". Almost all of our horses have their own turnouts, where they can groom and enjoy each others company over a fence - they are much happier and safer this way. Their paddocks are slightly smaller, but they are old or broken and can't move much anyway.
If I were you, I'd be calling authorities, they wouldn't take the horses - they'd come in, insist on vet care for any of the injured of sick animals and do their best to educate the owners on the minimum needs of the horses. This includes food, clean water, and a safe shelter away from other dangerous horses. It sounds to me like a terrible situation for a stud-like horse to be owned by such inexperienced people. I truly hope this gets better - but I don't think you can change their minds yourself. Tell the authorities you're a volunteer there, but you realize the owners need more help, but you would prefer to stay anonymous - so no one holds it against you. But this sounds like a terrible situation, if they let wounds and aggression like that go unattended I can't imagine what else they're not doing for the animals.
Please keep us posted.