AO's emergence wasn't even what horrified the angels and gods; his momentary appearance was met with reverence. The terrifying part was what came before it, when it was just Arad fighting Vorvadoss and the Avatar.
All of the void dragons present there could feel Arad's presence, as unlike Gojo, he didn't bother to hide his own existence. He came out of Eris's blood furious and everyone sensed him as he shattered the Gravastar and clashed with Vorvadoss.
When the void dragon saw Arad, it could only feel one thing: fear. Their magic was nowhere near his; their aggression didn't match him either, and neither did their own will to fight. They couldn't even come close to understanding how he fought. His space manipulation far surpassed their; his mana reserves were just absurd, his size was horrifying, and on top of it all, he didn't seem to care about ranks, orders, or the gods either.
