Death/Killing - What do I do??

I am a father of three beautiful and loving children (boy 6, and girls 4 and 3) My wife and myself strive to provide and nurturing and loving environment while instilling our values and morals. We recently were invited to another couples house for a long overdue get together. Our friends have 2 children a 6yo boy and a 3yo girl. I arrived at our friends house around noon and everything seemed normal as the kids greeted each other and went on to play. They spent most of the time outside and in the pool, having fun and being kids, then around 3pm they all went in the house to spend some time in the playroom with the games and toys.

I know this all seems pretty normal, but right before dinner is when something came to my attention that really unnerved me. While helping my wife (who arrived much later in the day) and friends round up the younger kids and get them ready to eat. I found my son inside on the the couch in the fetal position crying his eyes out and shaking in fear. It took me quit some time to calm him down and find out what was the matter.

It turns out that the entire time the kids where playing in the house my friends son was tormenting and terrorizing my son and older daughter with death, dying and killing. My son did finally tell me that he was telling him "I'm going to kill you" and you're going to die." I was amazed and at a complete loss. I had never seen my son so upset, nor have I ever heard of such a young child behaving in such a mean and cruel manor. When I confront my friends his mother stated the he was going through a "death phase." Am I wrong in saying that it is perfectly normal for a 6yo to be concerned about death and dying and the feelings of loss that may accompany it, and not to be fixated on threatening other children and tormenting them with it even when he can see that it is making them visibly upset? His parents spoke to him briefly about the subject telling him that it was "not nice to talk to your friends that way" and "say you're sorry to Carter" but it appeared to have no lasting effect. Their son did calm down some and we were all able to sit and have dinner.

The kids finished their meals first and went off to play. Then just as I was finishing up my dinner my 4yo comes to me with tears down her face saying "the bad girl is coming to hurt us." When I brought this up to my friends they yelled at their son for a second or two and again he just blew them off. This prompted us to start collecting our kids and packing up to leave. We had had enough and so had my childern.

I really like our friends and enjoy their company, and their daughter is a real sweety and plays very well with our girls. But their son has always had behavior issues. When the kids were younger he would hit and take things and tease, which we just chalked up to kid stuff, even though he was much more extreme then any of our other friend's or family's kids. My friend did recognize that I was upset and apologized to me, but at this point i was not in the mind set to talk about it with them.

Now, how do I tell my friends that I think their son is disturbed and needs professional help, and that my wife and I don't feel comfortable having our children around him especially when they are not in direct sight? I mean, a saw a drastic change in my son demeanor, behavior and they way he interacted with everyone after the incident in the house when I found him crying. I don't want to expose him to that type of torment. Kids being kids and working things out for themselves is one thing but I think this is on a whole different playing field. Am I off base here? Please let me know what you think. It is weighing heavy on my mind.

I look forward to your response and advice.