His stated goal with that plan was to use the evidence of Rock's aggression to build an alliance, which could plausibly be to Rain Country's long-term benefit. That didn't work out. Morally speaking I think that's worse than if he'd gotten an equivalent number of people killed by negligently screwing up some routine administrative or logistical task, but not as bad as if they'd been e.g. targeted specifically out of some petty personal grudge without strategic rationale.
Certainly he's no saint. The "worthy of loyalty" question I'm concerned with isn't exactly about morality in such a broad sense, though. Now that things aren't going perfectly according to plan, and this level 8 secret just dropped in the lap of a genin team, is he going to be reasonable about the 'through no fault of their own' part? Or is he going to break the social contract to a point where they (briefly yet permanently) regret cooperating with him?