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that one book would say that horse were shot and used as improvised breast-works with drawing to that effect. While others made reference to the oral history that they were chased away...
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Or, the more likely situation, there was some of each. All those men means there were a lot of horses as well. Some may have been run off, others may have been kept, shot by indians (though that would be somewhat doubtful that they would do such a thing on purpose...the Indians treasured horses) or killed by desperate cavalryman who wanted some sort of cover when they realized they were literally surrounded by indians and their fellow troopers were dying all around them.
Being at the battle site showed very plainly that there was NO cover for Custer's men. The trees that are within a mile of the place where Custer fell are all probably only 40-60 years old. So those trees weren't even there during the battle and they were only in a location where Benteen could have used them had they existed at the time. Where Custer was...no trees. Simple, exposed hillside.