Dragons need to be done well. That said, there arent really much restrictions on them. I always thought of dragons as elemental creatures, powerful and intelligent. I dont care if it deviates from the classical fire breathing lizard. Led it shoot lightning, let it freeze the air. Let it spit toxic loogies. All are awesome in their own right. Be they big, small, lizard, serpent, giant flying puppy dog, evil, good, it does not matter.
What they do need is intelligence. They are not animals, They are DRAGONS. Their threat and majesty come largely from their ability to crush you not only physically, but mentally as well. However, with intelligence comes variety. They should have their own personality, their own sense of style. Like us. They are their own race of sentient creatures, not a clone army comprised of one arrogant greedy bastard endlessly repeated unto infinity.
I would love a game with a diversity like that. Find a friendly dragon, ally it , go kick some ass, good times be had. Dragonheart style.