Personally, I like MacArthur.
As for "nuclear Armaggeddon" ...not even close. We're talking about April 1951.
https://en.wikipedia.org/wiki/Historical_nuclear_weapons_stockpiles_and_nuclear_tests_by_country
299 US vs 5 Soviet as of 1950. Not even a fight.
China had no nuclear weapons, and Stalin would never have exposed the Motherland to American A-bombs for the benefit of the Koreans and Chinese. And even if he went full stupid and did, The USSR's ability to deliver nuclear weapons to anywhere outside Eurasia was effectively nil at the time.
Stalin knew this, and he knew that the price for "communist brotherhood in the face of capitalist aggression" (or whatever nonsense he would have said) would have been a glow-in-the-dark USSR.
My conclusion: MacArthur was correct to call for atomic weapons vs the Chinese. And Truman was a moralizing idiot whose dithering first lost China to an ideology worse than Nazism, then let them set up a puppet state in NK.
It would also have set a precedent. It would have smothered the Nuclear Taboo in its infancy, rendering the nukes as Yet Another Weapon of War - albeit one with staggering consequences. Liberal use of nuclear weaponry would have been the norm, rather than just the atomic bombings of Hiroshima and Nagasaki. The Soviets would "owe" the Americans a nuke, basically nuking one of the USA's clients in future as payback in a future conflict.
Furthermore, once China got its own nuclear arsenal, it'll be very eager to pay American back in spades. Yes, Mao was a nutjob who didn't mind the consequences of nuclear warfare (he probably didn't understand the scale of the damage a nuclear exchange can inflict, but he probably didn't care), but the next Chinese leader would still have a serious bone to pick with the US over the devastation of Manchuria, formerly one of China's most prosperous territories.
One of the reasons the Vietnamese were so reluctant to negotiate with Nixon in the 1970s was because he supported a proposal by the French that the Vietnamese rebels be hit with American nukes. Eisenhower (who was president at the time) and the British thought it was a horrible idea, and nixed it. And yet it eventually came out, making the Vietnamese hold a grudge against the man who pushed hard to get them nuked while they were fighting French colonial occupation. By that token, the Chinese would be
extremely reluctant to accept the olive branch that Nixon offered them in 1979, because the US had used nukes and killed millions of people in the scenario you propose. The detente would never have happened, and we'd have a more hostile China.
Imagine the Cuban Missile Crisis with the USA already having used nukes. It would less be two guys talking each other into lowering their guns down and talking like sensible people, and more like one guy trying to talk a mafia killer into not pulling the trigger. The impetus would not be on reducing tensions, but getting a first strike in because the other guys clearly has no qualms about firing the nuclear gun when it suits him. Better to score some damage while we can, because he'll certainly try to annihilate us.
Also, MacArthur's problem was not that he demanded to use nukes and Truman denied him,
but that the General, a member of the United States' Armed Forces went back behind Truman's back to appeal to the American people, basically going above his head and trying to subvert the chain of command. Popular general or not, correct decision on China or not, that was a fucking coup, a blow against the very jurisdiction and authority of the President, and one that resulted in a much-deserved dismissal.
Was Truman too much of a coward to use nukes? Probably, but I disagree; using nukes would have set a horrible precedent. But there is something called "obeying orders" and "being a good soldier", and MacArthur clearly failed at that, his own ego deciding he was the only one that mattered.
The atomic bombs would've turned southern Manchuria into a nuclear wasteland on par with Chernobyl, which would've begun affecting the local environments of both China and a newly-united Korea. Radiation tends to spread over a long period of time.
Plus, this. While 50 nukes in the 100-kT range wouldn't have been that devastating, there's still going to be plenty of radiation, plus any city, population center or industrial complex hit by one will be utterly devastated, thousands killed (with a high chance of massive civilian casualties). It'll be used as anti-American propaganda forever, especially since there have been exactly two countries nuked, both of which were Far Eastern, which can be easily construed as racist/imperialist intent.