So the English translation I have of Herodotus gives this description of the appearance of the Persians:
"The Persians with this equipment:—about their heads they had soft felt caps called tiaras, and about their body tunics of various colours with sleeves, presenting the appearance of iron scales like those of a fish."
The common interpretation is that Herodotus is describing the Persians wearing armor. However, the sentence reads to me like here is merely saying the tunics have the appearance of iron scales due to their colors and pattern.
How would the sentence have been presented in the original Greek? What is the correct view of the passage?
It would have been handy to know where this passage appears, but I found it: it's book 7, chapter 61. From what I can tell, the translation you quoted is pretty literal.
περὶ δὲ τὸ σῶμα κιθῶνας χειριδωτοὺς ποικίλους,1 ... λεπίδος σιδηρέης ὄψιν ἰχθυοειδέος
"around their body, [they wore] multicolored, sleeved tunics--a fish-like appearance of iron scales".
It definitely says κιθῶνας, which is dialectical Greek for χιτών "chiton", which is a typical male tunic. But I think that he's describing tunics covered with fish-like scales, not tunics that are decorated to look like fish scales.